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Podcast July 29, 2022

Edge Of Austin 2022, DCentral & Consensus: 2 Panels - Social DAOs: Building Decentralized Communities & Web3 Marketing: How To Build Brands & Communities

NFT Social DAOs | Social DAOs

In this episode we share panels that Jeff Kelley and Josh Kriger hosted during their visit to Austin TX in June of 2022. We’ll introduce an expert lineup of guests to speak on some exciting developments in niche areas in the space. For the first half of the episode, we dive deep into the benefits and the potential future of Social DAOs. Joining them for this portion are Shaan Ray (Head of Web3 Partnerships at Ionixx Technologies), Jonathan Gregis (Lead Blockchain Engineer for LinkPool, Co-creator of ATX DAO), Daniel Tauhore (DAO Master for MODA DAO), and Elmer Morales (CEO and Founder of Campus DAO). The hosts also discuss the move into Web3 Marketing with esteemed experts in the space: Zach Nelson (CEO of Genzio), Greg Gopman (Head of Marketing Business Development for Ankr), Tim Martinez (Co-founder of Digital Niche Agency), and Itai Elizur (Partner at Market Across). Don’t miss out on some exciting news, and stay on the pulse of the NFT space by tuning in to this jam-packed episode. Special thanks to DCentral Austin for sharing this content!

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I’m Shaan. It’s nice to meet everyone. I’m the head of Web3 partnerships at Ionixx Technologies. We build Web3 applications for entrepreneurs.

I’m Jon. During the day, I am a blockchain engineer for LinkPool in the chainlink ecosystem. At night, I am one of the founders of the ATX DAO.

I’m Dan or Daniel. I’m the DAO Master for both MODA DAO and PUMLx.

I’m Elmer Morales. I’m the Founder and CEO of Campus DAO. Previously, I’ve been a software engineer in this space for a long time and now building something cool in the Web3 space.

Let’s start with the basics for a moment. Who has the best description of what a DAO is that you would use to describe to your grandparents?

Think about a DAO as a corporation. Corporations have stock and shares that investors and employees own. A DAO is similar to a corporation, but instead of shares, you have tokens. Rather than being limited to a US audience, a DAO is a global organization that can be owned by the community, members, investors, founders, and so forth.

Society and communities are incredibly complex. What are the advantages of building a community as a decentralized DAO?

The advantage is the fact that it’s autonomous so the community can manage it. It autonomously executes the inherent logic within the DAO even when the community is not awake and at their computers. Transparency is also a very big deal, especially depending on the use case you’re looking at. For charitable DAOs, transparency is a big thing and it’s auditable at any given moment. Those are two. I’m sure there are several more.

When we think of traditional companies, we think of top-down. With community DAOs, it gets everybody’s voice. It’s a bottom-up approach of voices that you may have never heard from in a traditional company that gives proposals out or at least initiates proposals that everybody can vote on. That idea in a traditional company would never be heard.

It’s empowerment. DAOs are about voting DAOs and giving the ability for the community and token holders to have the power of the direction of where the DAO might be heading. They have a say in what is going to be happening. The way that I look at it might be a bit of a contrarian approach, potentially utopian as well, and maybe naive but flat and horizontal. The core contributors of those who are building the DAO and the community work hand in hand. It’s not like we have a hierarchical approach. It’s more like everyone collectively works together on delivering and executing what the mission is.

NFT Social DAOs | Social DAOs

Social DAOs: One of the biggest advantages of DAO is the fact that it’s autonomous. (Shaan)

Another advantage of a DAO is giving access to early adopters. A lot of times, people find a cool project and they’re not able to participate in that upside. If you discover something cool, you’re part of it, and you help build it, participating in that upside is key because you get rewarded for that early adoption. In the traditional model prior to DAOs, you might get a retweet, but you don’t get to participate in that upside if you discovered Twitter on month one.

One of the beautiful things about what you talked about is the low barrier to entry and accessibility for anybody. I wanted to ask. When you think about communities in general, what makes a community ripe for the DAO model? What are the attributes of a community you would look for that say, “That’s a good fit for a DAO.”

Austin is a great place for this because with COVID and all of this migration into Austin, you have so many new people coming into this city that doesn’t know anybody. They’re either crypto curious or into the blockchain ecosystem already but they have no friends in Austin. What do you do then? ATX DAO is a big networking group. We have a bunch of meetups in real life, unlike traditional DAOs where everything is online. We create that bond between our members because we meet each other, go out, have beers, work on projects together, get people jobs, and get people that need employees. We create a massive network for Austin with all of these new people coming here. It’s a great ecosystem.

It also comes down to the specific mission at hand. What is the DAO trying to achieve? What are we trying to achieve? Who are the people that are going to be able to do that? If I’m trying to, for example, buy a Bored Ape, and I went to fractionalize the IP and give ownership rights back to those who hold it, you’re probably not looking at people who are entering into the space. You’re more than likely looking at people who have a little bit more money sitting in their wallets.

They might want to have a little bit of a piece of what could potentially be quite a valuable asset. What we’re doing at MODA DAO is trying to enable fair ownership rights for all musicians and artists on-chain. The people that we need to be able to do that are those who love music and those who want to make it. It does come down to, “What am I trying to do? Who are the people that are going to be able to help me to do it?”

The most important thing is having clarity and a very clear mission. As long as the community knows exactly what it wants to achieve and can write down the rules for how to achieve it, then everything else is easy. The most important thing is having clarity on what the common mission or the objective is.

Elmer, with Campus, we were talking a little bit about that before. Do you have some thoughts on that too?

Communities that are active and engaged and want to be part of the building of that entity are ripe for that. A lot of times, people discover things early on. They feel so connected to that mission. They’re interested in helping out even if it’s not an official role. Call it a volunteer. When you have a community with a lot of passionate members like that, then that’s very ripe for a DAO type of structure.

Passionate members are aligned around a particular vision that wants to be involved. These are some of the attributes of a community that could be ripe for a DAO structure. I wanted to ask Jon. You mentioned backstage this connection to other communities, not just ATX DAO but also looking outside of the borders of Austin. Can you talk to us about that?

What ATX DAO is trying to do is build the blueprint for city DAOs. We have talked to other cities that have that same need or want, but they don’t know how to do it. For us at ATX DAO, we started with not a single idea of how to do this. We created our Discord and our website and threw everything at the wall to try to figure out how to do this right. We want to help other cities that want to do the same thing that we’re doing in their communities as well. We’re reaching out to different cities from Tokyo to Istanbul and different states around the country to teach them how we did it and then at least point them in the right directions to start their communities in their cities.

It really does come down to, what are you trying to do and who are the people that are gonna be able to help you to do it? (Daniel) Click To Tweet

Building any community is difficult, never mind one that has the infrastructure that you’re talking about, the guidelines of voting, and all the different dynamics. What are some of the pitfalls of DAOs?

Poorly written code is one of the biggest pitfalls. It also leads to a lot of security issues if the code doesn’t address some eventualities. The second thing to be aware of is regulation. There’s no such regulation at the moment but I feel like it’s coming and it’s creeping up on us pretty fast. I wrote a blog post about how the gap is narrowing between DAOs and traditional enterprise organizations.

a16z or Andreesen Horowitz wrote another blog post about how every DAO should find jurisdiction and think about the legislation that’s about to come. There’s no legislation but we know what it’s going to look like. It’s just in the metaverse, but eventually, you will have to pick a jurisdiction and operate more like a business. A lot of crypto people don’t want that but that’s coming pretty fast. That’s another pitfall.

We’re also speaking about legislation. We’re pretty lucky over in Australia. DAOs are slowly becoming more of a recognized legitimate business model. Potentially, in that part of the world, things are a little bit more progressive or a little bit faster-moving. In terms of other pitfalls, I would also think about speculation overall. You’re trying to build a community of people who are engaged in your core mission and what you’re trying to achieve. In any project, launch, or anything in crypto, there’s more than likely going to be someone who’s trying to have the next flip and make some money.

It’s about trying to figure out how to navigate that particular problem. You either turn those people into supporters by providing them with certain attributes or empowerment. It’s the deincentivization of sell pressure and trying to make sure that your DAO can hopefully succeed in this space. We’re still so early. I’m sure that over the next 5 to 10 years, we will see legitimate DAOs come from these early grassroots steps.

I wanted to add a quick comment on the poorly written code. That’s one of the pitfalls, but the way that we should think about DAOs is to think of them as traditional organizations. Even though they’re decentralized and anybody can contribute and get access to open-source code, you still want to have people within the communities that are leaders that can help navigate and define guidelines. In the case of code, there could be coding standards and other things that are still in place within the DAO that people have to follow.

That’s what we’re doing at Campus. Given we have a pretty strong background in building software organizations, we’re applying that same model within the DAO. It’s making members within the community who have been vetted and experts that can play a leadership role, guide, do code reviews, and things like that. You could still make it work if you translated the traditional how-to-run-a-company model into the DAO space.

To speak on that as well, as a company, a lot of people don’t talk about the growing pains as far as the DAO goes. As far as ATX, we started with 5 people, and then 25, 100, and 1,000. It needs to scale. You need to not grow so quickly that you outpace yourself. We tried to create a solid base that would allow us to scale to that next level. We have our committees that will each do their little thing to help our DAO grow into that size. The biggest pitfall is somebody growing too quickly or running with an idea without thinking it through. The best advice is to sit down and figure out who are your key players to create that base. From there, the sky is the limit.

Don’t leave behind the lessons learned from traditional business, organizational, and community structures. Take the best of it, leave the bad behind, and continue to grow. Dan, you mentioned the flat nature of the organization. That is a tenet of what you’re doing. How do you maintain that over time as committees form or people gain a little bit more influence or even voting power within the organization? How do you maintain that vision of a generally flat organization?

The way that I started thinking about the organization of DAOs, in general, is by thinking about them as living and breathing organisms. If you think about how a cell exists, you’ve got the barriers of the cell. In this metaphor or analogy, you can think of the barriers as the core mission. Within each part of that cell, you’ve got different parts that make up that cell. There are working groups. You’ve got marketing, tokenomics, and applicable gamification.

NFT Social DAOs | Social DAOs

Social DAOs: Community DAOs get everybody’s voices. (Jon)

You’ve got something called DSC, which is the DAO Specific Component. With MODA, that’s got to with music. With PUMLx, that’s got to do with the move-to-earn. There are all these little individual working groups all working together cohesively and trying to figure out how to solve the core mission. I might get battered for this, but if you get some potentially centralized organizational structure within that flat horizontal structure, things will move.

The analogy and the way that I think about it is, let’s say you’re trying to sail a ship out to sea. Everyone has the same voting power and a voice. The problem with that is if everyone is saying, “I want to go East, West, South, or North,” the boat is going to sail in circles. You need someone to give some direction, “We’re going to go here because we want to do this.” That’s how I’m looking at it. You need that flat structure so that everyone can work cohesively and still maintain that organization so that we can achieve that core mission.

That North Star is pretty important. A lot of people are thinking about this and probably wondering, “How can I launch a DAO to support my community, grow my community, and achieve these same goals that we’re talking about here on stage?” What input or actionable advice would you have for folks that are looking legitimately to do this?

The first part of building a DAO is creating a community and a mission and getting people to support that mission. Before you go out, create a DAO and a DAO token, and do all this formality stuff. It’s testing out the market and seeing whether there’s demand for what you’re building or you can rally a community around that. In the traditional tech startup world, that would normally be an MBP where you go out and see if your idea has merit and would people buy it. Do some proof of concept for your DAO and see if people would have an interest.

I’ll give an example. I’m involved with another project called The Exotics Car Club, which is an NFT and a DAO that is doing fractional ownership of exotic cars like Lamborghinis, Ferraris, and things like that. The club allows you to rent and take McLaren out for a spin as long as you’re a part of that club. One of the things that they did to prove that motto is they hosted a small event out in Orange County, got about 50 people together, and tested the market to see, “Would people buy this?”

Out of those 50 people, probably 40 of them were like, “I’m in immediately. I no longer have to buy a Lamborghini. I can now spend this few hundred or a few thousand dollars on this DAO token, be part of that, and get access to the cars.” That was a good example of a proof of concept and how someone should test the waters. That would be step 1, and then step 2 is to go and make it a little bit more formal.

Many people don’t know this, but here in the US, Wyoming created a legal structure for a DAO. It’s a DAO LLC. They’re the first to innovate within the United States. I’m sure there are others around the world that are going to follow them. Researching the Wyoming DAO and setting up an LLC structure there is probably step two, in my opinion.

It‘s goal-oriented like any other company. When you start a company, you have to have a goal in mind, not just to start a company to start it. For your DAO, figure out what goal is that you want to attain, and then find those people with that same goal. With ATX DAO, when we first started this, our goal was to be the crypto capital of the world. Every one of our members believes that same point.

That’s why we progress further and appoint with the government side. Because we are a community DAO and a city DAO, we can help build the legal structure and the government structure by doing that as well. We were in talks with local, state, and even Federal-level legislation to get the crypto side of things better in not only Austin but Texas.

To get more technical, I think of it as development funding and deployment. Once you got the community stuff and the business side figured out, you develop the DAO, create the governance mechanisms, and think about how you’re going to fund it. Every DAO has to have a treasury. The treasury is a little bit of money that the DAO needs to execute the inherent logic within the DAO. If the DAO is about buying and selling NFTs, there needs to be some money in the DAO by the first few NFTs.

Poorly written code is one of the biggest pitfalls that leads to a lot of security issues. (Shaan) Click To Tweet

The 2nd step is funding and then the 3rd step is deployment. That would be where you put all the logic you’ve created online on one of the blockchains. The developers would step back and the community would step forward. The governance from that point onward would be with the community. Our company can help out with the development part of the DAO once the business logic and the communities figure it out.

I‘ve also started thinking about how DAOs can potentially be a little bit scary, but the mechanics of a DAO and what a DAO is trying to achieve at the end of the day could be quite applicable across the board in different variations. I’ve been working on different ideas for artists. Quickly think about how musicians have teams of people who will help them do what they need to do best. Musicians are artists at the end of the day.

They’re trying to create their art but then behind them, they’re going to have a manager, A&R, publicist, etc. Instead of that model, what if the team was decentralized? What if you built a community of thousands of people who could bring opportunities to that artist? Instead of having this small group of people with 4 to 8 minds, you’ve got thousands of minds. You’ve got someone in your community who happens to know someone at Sony Records and can get you a publishing deal.

You’ve got someone in your community who knows Cole Bennett of Lyrical Lemonade and can get you a music video. You’re leveraging your community to further your career along, but you wouldn’t necessarily deem that as a DAO. None in my opinion anyway. I’ve thought of it as close to a base. You’re building a fan base of people. The mechanics at a root level still work but slightly differently.

Take note. These guys have been there and done that. They’re doing it now. They’re actionable steps for sure. We appreciate that. One part of learning and building that I’ve always appreciated is looking to others that have been there and done that. I’m wondering. In your view, other than your projects, what do you see as the most effective functioning DAOs in the space that we should look to for inspiration or guidance?

One DAO that I’m a fan of is Gitcoin DAO. They’re doing a lot of cool stuff for developers in the space. They have been very transparent about every decision, every vote, and everything. The founder of Gitcoin is not about getting rich quickly. It’s more like, “How do we support the community?” I’m a big fan of that. For those of you in the audience that are looking for a good model or someone to follow to see what they’re doing and how to run a DAO, I’m certainly a fan of Gitcoin DAO.

NFT Social DAOs | Social DAOs

Thanks, guys. Are there other questions?

NFT Social DAOs | Social DAOs

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I’m not Jason Fishman. I’m his Cofounder. He wasn’t able to make it. I’m Tim Martinez, the Cofounder of Digital Niche Agency. We specialize in investor and user acquisition heavily focused on paid media. We are a full-service advertising agency located out of Los Angeles. We have a staff of about 25. We have generally focused on raising capital. That hasn’t been our sweet spot but we do many other things beyond raising capital for early-stage companies. We’re going to get into all that. I’ll stop my pitch there.

NFT Social DAOs | Social DAOs