Internet native organizations — whether we call them DAOs, tokenized communities, metalabels, or other — are novel organizational containers allowing people to collaborate in previously impossible ways. Rueben Bramanathan is a General Partner at Ideo CoLab Ventures, and he believes in the power of tokens to enable more equitable means of organizational participation. How we incentivize, reward, and design for the specific interactions within these containers remains an exciting design space.
0:00 - Intro
2:02 - Reuben’s Journey
5:51 - The Evolutions in Social Crypto
11:41 - What Internet Native Orgs Want to Achieve
16:14 - The Reality of Working in DAOs
22:13 - How to Structure a Great DAO
28:29 - How to Launch a Token in 2022
39:01 - Is it Cool to Build Corporations or Exit to Community
43:24 - Risk in Participating in DAOs
50:01 - Wrap-Up Questions
Jess Sloss 0:00
Reuben, welcome to the pod.
Reuben Bramanathan 0:01
Hey, thanks, Jess. Great to be here.
Jess Sloss 0:03
Have we actually have we done one of these before? I can't remember.
Reuben Bramanathan 0:06
I think this is the first time look at us, we're finally doing it.
Jess Sloss 0:09
It's crazy. Because you are somebody I talk to on a weekly basis and have been involved in Seed Club from like, the earliest days. And maybe that's a good place for us to start. From my recollection, I think Brian Flynn probably connected us. And you were one of those original 11 people in the telegram chat, exploring this sort of world of social tokens. But I'm curious which sort of take your yourself back to that time period. What were you working on? What got you interested in the space? Like, how did you get to that first connection point with Seed Club.
Reuben Bramanathan 0:39
Yeah, as I recall, we were just hanging out in that telegram group chat, you know, it wasn't really like much of a plan. But it was pretty organic. I think at that time, I was working with Zora or around that time. So pretty close to a bunch of folks in this space, I launched my own personal token in 2020. And I think off the back of that we were the folks thinking about personal tokens, social tokens, fan tokens, community tokens, and everything that they've become known as since. And so I think you can see in the history of those names, part of the evolution of the space, so yeah, definitely it was, it was a privilege to be there to have been there since since those days.
Jess Sloss 1:18
Yeah, it's interesting is that it's sort of been reflecting a lot lately on how to be the most useful to early stage community token projects, the work that we do in depth at Seed Club, and sort of realize that a lot of like, I often gloss over what happened in those early days, in many ways, because it was just so emergent, because he said, there wasn't some big plan, there wasn't like a roadmap or a framework that we were running through. And so it's sort of easy to overlook, I think a lot of the things that just happen to go right, or maybe we were strategic about doing right are probably some mixture of the two, that I think the biggest one for me is just like how the core that we got right early on was getting people who are truly interested, passionate, just like explorers of something that wasn't even able to be defined into a room a digital room at once. And I think that can be a difficult thing to do in bull markets. And it can be difficult thing to do as like a space grows. And there was sort of just like, a natural emergence that was so powerful there.
Reuben Bramanathan 2:14
For sure. I think that's a great point, it's, it's harder to do when there's 1,000,001 things going on in a bull market when everyone's being pulled in different directions, and everyone's distracted. And in a lot of ways, I think, at those stages, you know, you naturally get the folks that are passionate about exploring, exploring the edges, if you will, but it's just like, you know, it's easier in that sense when everyone's kind of a bit of a misfit a bit of a an oddball.
Jess Sloss 2:39
Yes I think it's like a less. And I don't know how they sort of build us in today. But there's less like, it didn't have to become anything. Like there wasn't like a pressure for it to become something and there wasn't even clarity, that would become something and so both that's like a filter. And then also, I don't know, for me personally, being very involved in moving things forward, it was like such a weight off my shoulders in a certain way, like there was no both having the support of that early group. And also that there was really no wrong to be done as long as we were building with the right intentions and just sort of chasing down whatever the interesting thing was, yeah, it's a bit different when you have like capital being raised, and you know, 100 million dollar valuations of projects that you can sort of compound against, and like a thing starting to take shape, beneficial in so many other ways, obviously. But I was also thinking about like the pieces that sort of, it's almost fair to say we're coming into a version of that time again, right, there's a lot less intensity in the market right now, probably will continue that way for some amount of time. And so we're gonna be edging up against a new time where people are only gonna be in crypto, if they're the missionaries, not the mercenaries, I think most people in the space think that is a very valuable time and a useful thing to have happen. But there's, you know, when I think about where we were in 2020, there's a number of fairly substantial innovations that kind of led to, you know, to say, your ability to mint a token for a token to have a market that exists to be able to like, you know, gate membership and access. So this would be like Uniswap having launched the proliferation of these contracts to mint things, you know, coinvise buys, eventually coming out. And then, you know, collab land. And those are sort of some of like, the basic building blocks that enabled this whole space to sort of start to piece itself together. I'm curious if you sort of sit today because you know, you get to look at a lot of deals and see what's happening, what has been built or is being built right now that you think might be like an enabling force for whatever the next evolution in this call it social crypto world.
Reuben Bramanathan 4:31
Yeah, I think that's right, in that, you know, there are those those building blocks that need to emerge for the next wave to be viable. I think some of them look like what we saw in the last cycle, you know, the things you've alluded to, obviously, including, you know, the ability to launch a token to mint an NFT to get access to distribute Airdrop to recognize ownership and membership and all these kind of tools that slowly have emerged. And I guess it's kind of like well what was missing in the last cycle in terms of the tooling and I would say it's the same kind of things that we've been seeing for the last few cycles, which is just like a lot of it on the the experience layer, we like to call it, we talked about basically every aspect of how a user interacts with a protocol or a community. And so obviously, wallets are a big a big aspect of that, or whatever wallets become the boundary between the wallet and a profile, or a wallet, and a signing device. Like those kinds of differences. I think there's a lot of room to explore there, and especially in the next phase of web three social which we're already starting to see. So long story short, I think that a lot of it is on the user side, obviously, on the you know, the infrastructure side, you know, we're going to see a lot more in terms of throughput and performance and scaling solutions. And I think that's super important as well, that goes on continuously, right. So I think it's what's going to enable the next wave, it's gonna be more stuff on the experience layer.
Jess Sloss 5:57
So where do you sit on the I think that's a really interesting discussion happens around that experience layer. And, and I think there's like a tension that sort of exists there. Is there an easier thing to say, we need better user experience in crypto? And I don't think anybody would disagree with that. The question is, like, what trade offs are you willing to make to achieve that, and I think that's really where a lot of the ideas behind, you know, improved UX start to sort of fall down in that, you know, if you truly remove, you know, the self custody of assets or identity that kind of lives at the wallet layer, what are you giving up on? And I'm curious where you sort of see where you fit in that discussion, like, do you see a path where we actually obfuscate some of the crypto and that actually gets us to a better place? Or do you think it's actually more that users are going to get better at using these tools more comfortable using these tools might be a slower path to adoption, but that's ultimately going to be the hard tech wins the day type angle?
Reuben Bramanathan 6:50
Yeah, I'm definitely more to that end of the spectrum, even though, you know, I'm part of a firm, which is, you know, firmly built on design principles. I think that it's because it is so hard to build the right experience in crypto. That's why design and product is so important. But the reason that it's so hard is that this is not a game, you know, we're not building fun, new things, because it's, you know, quirky and interesting and new human. That's, that's some of the benefits. But we're building technologies that lead us creating internet native organizations, we're building technologies that let us bring together people from around the world, to interact, to collaborate together to build stuff in a way that wasn't possible before. And so that is an evolution of what Bitcoin has done, what DeFi has done, what blockchains have done to enable censorship resistant, global participation outside the bounds of what was historically possible. We've gone too much of a rant right now. But I think in general, that's my position that this this can take much longer than we think. And yeah, there are always trade offs. But the more trade offs we make in favor of faster and easier, then the less resilient the systems that we build will be. And so we need to be very careful about that.
Jess Sloss 8:02
Yeah, I mean, I love the I'm fascinated with the criticism of crypto generally. And I think it's often well placed, often misguided, but like, the question that I keep coming back to is like, you know, if it could be done on a database, why isn't it done on a database? And I think the things you're pointing at, there are the reason it shouldn't be done on maybe a centrally controlled traditional database. And if you so I always think like, it always comes back to tokens and token ownership. And in my overly simplistic worldview, like that's like, the reason why if we were trying to distribute ownership and networks through a traditional legal system, it would lead to centralized organizations and inability to, for many to participate. And in the crypto and blockchain world, we sort of have that as like the I think that's where I get the most conviction or on why crypto and I sort of see like, where people fall on that line of whether that's important or not important seems to dictate their willingness to, I guess, look past some of like, the obvious challenges and barriers still exist in this space and see that as like a valuable future to push towards.
Reuben Bramanathan 8:59
Yeah, totally. I mean, if we just trying to compete with Web2 by replacing web2 , one, we're never going to win, we're not going to get there and two, like what, what's the point? You know, like, the whole difference is this kind of unstoppable, permanent machine that that's going to enable so much more creativity and so much more collaboration than is possible in the existing system. And we can dive more into this when we talk about DAOs and legal stuff. But I think that's the critical point.
Jess Sloss 9:28
These are words that I've been trying on a lot to describe the space of internet Native organizations. Some of the work we've been doing over the last quarter is trying to figure out what is the what is the right level of abstraction, the right word to use, describe the things that we're so passionate about bringing into existence or supporting at Seed Club and feel like DAOs is a very, both very specific and overly general term in some ways. And I really do love the idea of internet native organizations, this idea of like, they are born of the internet, they are owned on the internet, they create value and that's captured on the internet. But I think if we sort of look at the lens of like, why internet native organizations, I'm curious, you've been building towards this in various ways for a large part of your career and focusing on this increasingly, where does that passion come from? What are we trying to achieve here?
Reuben Bramanathan 10:15
A few places, I think what we're trying to achieve is new types of organizations that are inherently more equitable. They're more open, they're fairer, they're accessible to all I've said the same thing a few times. But those kinds of values are really important. And I think that the reason that these are so important is if we think about the ability of people globally to participate in different parts of the economy, it's been limited to date, by obviously a number of a number of factors, that we now have the technology to overcome, or we have the technology with that potential. So we have the ability to send money globally, without a bank account, we have the ability to communicate globally with anyone. And we have the ability to kind of create tokens and assets, which represent any anything we can imagine, the combination of these tools, naturally should lead to rethinking of the ways we've been building organizations. And so there's obviously a broad range of stuff and directions we could go in. But in doing that, I think we really need to think about the principles what we're building for. And for me, it's that fairness and openness above pretty much anything else.
Jess Sloss 11:22
Yeah, I very much agree there. Like I think early in my career, you know, there's big news today, as we're recording that Elon Musk looks like he's gonna buy Twitter again. And, you know, Twitter was probably one of my first and then favorite social networks to be a part of back in 2017. So like, I think my Twitter account can drive now in many states, which I think is crazy to think about. And it very much felt like, you know, the small secret thing that gave me access to this weird world of Silicon Valley. And, you know, there's millions of people participating in this network. And me as an early user member, contributor there just not having any, like, they might as well have been on Mars the ownership and were, you know, in some ways, it really reduced and made the world feel small, and then I could sort of get access to that information. And yet, there was so much of that iceberg hidden below. This is like the decisions, the business models the direction that these networks are chasing. So I think it's interesting, at least in my experience, it feels that the bar is actually pretty low to actually really make meaningful progress towards opening up organizations because they are so closed right now, you're so far away, unless you are in an investor or an early employee, and most of these networks, there isn't an opportunity to participate beyond being a consumer. And I think that's the interesting thing is like the evolution of consumers into members, owners, participants, whatever the like, there's almost like a whole bunch of slashes that need to get put between those things.
Reuben Bramanathan 11:39
That's true, I think that the slashes are pretty important because they define how different types of contributions can still be valuable. I think that's another aspect of DAOs in general, that, with this open framework for contribution, we can actually value the different types of contributions that historically have not been valuable. And I think as a part of that, you know, people that come to be part of a community or part of DAO have a bunch of different motivations. Right. So you mentioned a few of them there, you know, the kind of the membership or the collective, I think, there's also, you know, people might be financially motivated, people might be motivated by, you know, having influence or sway, or use it as a flex, or whatever that membership. So we can redefine organizations in a way that serve our relationships as humans and communities and not the other way around, right, not having to fit ourselves into a role in a corporation, or in a structure like that. And that should just enable so much more creativity and better connection.
I love this sort of lens of looking at the space as sort of like, there was a time where it was called The Future of Work, everybody would just call this the future of work, right? It's like, you know, maybe more scalable, more accessible. In the ideal world, you're able to bring your full genius and nothing but your genius to various projects and earn a good living for doing it. And I think like that is sort of the ideology or philosophy that's led to so much excitement in the DAO space. But I think it's also fair to say that a lot of those sort of early experiments in broad flat, hierarchical hierarchyless organizations have sort of struggled in different ways to make progress. And it's a fair comment to say that corporations are better at coordinating in early stage projects than the DAOs are. And so I've seen, you know, a lot more structure a lot more thoughtfulness and thinking about how we actually coordinate groups of people towards goals. I think there might be a world where people would look at what's actually happening in DAOs today and say, hey, that's like really just a corporation with a better name. Or maybe it's suddenly a couple of baby steps away from that corporation. And I think most people that are building in it, see like it as maybe a pragmatic step towards that bigger thing. So I wonder if you can comment sort of on like, the reality of what working in DAOs are right now and how you sort of see that progressing and if you do towards this bigger vision that that you seem to be so excited about.
I think that with a few limited exceptions. corporations going to be better at building product than DAOs. For for some time, I think that there are some activities that are going to be, for example, investing DAOs. Right, I think that's a pretty good use case for having DAOs legal structures that that can do a bunch of stuff. I think that for building community or building protocol, that's where we should think about this new way of building. And I think that a lot of the lessons we learned about hierarchyless flat organizations, were still through a lens of building products. And of course, if you're going to compete with companies on that, you're going to run into problems. But there's been a shift in thinking, thankfully, about what what DAOs are actually building, you know, the even from an investor perspective, the idea that a DAO or a startup or project could be building community as its product is new. And, you know, Seed Club has obviously defined or blazed a lot of that trail. So I think that's a really good point is that, you know, there are some things DAOs going to be better at, I think there are still a lot of things that corporations are gonna be better at. And we shouldn't try to end up with the worst of both worlds, which is a DAO which replicates a corporate structure.
This is the first time I've mentioned on this podcast, but Toby Sean's most recent piece, after lifestyle, I think, has done a very good job of capturing the importance of sort of subcultures. So he would maybe say subcultures instead of communities and just find Bitcoin and Aetherium. And, and maybe what ultimately, we're building FWB as the sort of subcultures and and really defines them as something other than, you know, it's not a corporation is not a DTC brand. That's just trying to plug into a community. There's something else here. And I think that is something that I still see a lot of like the broader crypto space not quite recognizing, and many investors still not quite seeing that as like, we would call it like a new asset class or community as a business, it's gonna be super interesting to see that evolution over the next little while because from where I sit, I see nothing but that bubbling up like that's and a renewed focus or awareness around that being the thing like Toby describes it as types of guys, right? Like if you're able to own a meme of like, the Nouns types of guys would probably would have the Nouns glasses in it. And, you know, probably a bunch of crypto punks. And there's like a culture that kind of exists there. And what happens when you sort of have coordination tools and financial tools, and all these things that are being built in the broader crypto space? I think it's a very interesting thread to pull on. But it's very much not trying to build product.
I'd say that the exceptions might be if you have truly a DAO in the sense that it's a brand or an overarching kind of umbrella, that can fund smaller teams that are actually building the product. So it seemed obviously Nouns and others experiment with that kind of model. But then that just goes back to Okay, well, the people actually doing the building are better placed in these smaller tight knit teams, but then the actual, you know, allocation of funding and the ability to connect through one brand. That's where the DAO is. So I think a lot of the time we get confused about what the DAO actually is, in any case.
Jess Sloss 18:04
Yeah, we I think about Seed Club as like the Seed Club network, would be like the DAO, which is, you know, the resources that exist there, the social capital that exists there. And the that, including the people who are members and owners and voters, and allocating capital is ultimately the probably, like, if I say, like, what are DAOs good at, they're good at forming capital and allocating capital. And there's a couple of question marks around, you know, iterating on allocating capital? Well, I think, you know, Nouns does a great job at forming capital, a good job at allocating capital. And let me probably some of the best jobs at allocating capital. And then like, I guess the the missing piece I see from much of this is like, how are we ensuring that we're learning from that process and getting better at allocating capital moving forward? And so I guess maybe that's a place I'm interested in exploring, like, what are the I think it's very doable. And maybe this is where reputation comes in, or where I think right now, it's still very much being tied together through social ties, social capital, like I've got this money, I'm gonna go do well with it, because I don't want to lose my standing in this community. And there's like a ton of upside potential for me to continue to build here. But I think that's separate from like the types of learning that an entrepreneur might have as they are trying to allocate a budget and make iterative progress towards a more specific goal. Definitely. So there's a couple of directions that I think we could go with this. And we kind of ended up in a fun little bacchetta. Here, that reminds me most of our conversations that we have Reuben on a regular basis. So I think let's stick with the topic of DAOs right now. And I think you're right in really highlighting that there are some really interesting experiments going on at, you know, if we think about evolving into what DAOs can become, and this idea of pushing resources to the edges and those edges being smaller teams that are coordinating, and there's a number of Nouns DAO and others that are sort of experimenting with it. One of the questions that we get asked quite often and I think is place we're really not spending enough time pulling ideas apart or smashing them together is this idea of like DAOs and the entities that support them yesterday, Moon birds announced their moon birds DAO, which is part of the proof ecosystem. And I think there's actually like a lot of interesting layers to pull back from that if we sort of look at the lens of like, how do we structure a great DAO, we sort of see two paths that are being done. One might be emblematic of Nouns DAO, where its tokens are distributed tokens represent ownership value from those token sales go into a treasury, and you have a vote and you make decisions and all the values captured in one Treasury controlled by one set of tokens, Moon birds, proof and a whole long list of others have these sort of equity based entities that have been spun out that have raised money, they've also sold tokens, you sort of end up in this like, interesting dance of like, who's trying to create value for who who's the consumer? Who's the owner? I wonder if you sort of have like, what are your current thoughts on how to structure a great DAO and you know, those two pathways.
Reuben Bramanathan 20:49
I think it's helpful to fast forward a little to a future state, if not an end state than some state where it's like, okay, this is a steady state. And we've actually achieved what we want to achieve, or some of it, and what does that look like? So I think that probably looks like there's this diverse group of participants, they're not necessarily all best friends, they can have some way to make decisions, even if they don't agree on everything, and they have a unifying purpose. And that purpose could be governing a protocol, it could be building a brand, or you know, growing a brand, it could be more charitable purpose, or it's something even more abstract. And you could think about metalabels in that category. So there has to be some kind of purpose. And there has to be a bunch of people like pursuing that. And I think in the end state of that, there's probably no core team, right? Maybe this is a hot take, maybe my hot take is the DAOs shouldn't have core teams. Or maybe it's more like they can't have core teams until a point. And then they shouldn't have core teams anymore. So and maybe that's not even such a hot take I think that's just kind of inevitable. So there's probably a bunch of different ways to get there. So to answer your question, I think that each of those pathways could be a viable one, the more centralized entity building, doing the initial kind of drops and building and building product, or the more decentralized, organic on chain way, I think the main thing is that, like, you have to have some credible pathway to get to that steady state. Otherwise, you're always in some kind of middle ground where you're not really decentralized, you're relying on a few people, or you haven't built something that people can rally around.
Jess Sloss 22:30
So I totally agree from like the perspective of people call that progressive decentralization. How do you go get stuff done. So there's so there there that you want to be a part of a government and that works, I think I'm more interested in thinking about sort of the value flow and capture in these organizations. And, you know, if we look at that Nouns model again, theoretically, the value is gonna be captured by token holders, right? That's the only asset that represents provenance or ownership or membership in this thing. And as the meme grows in value, theoretically, the value of those tokens grow, when we start to see like, let's say a doodles go raise a big round into an equity company. And then they have NFT collectors that also hold those NFTs. And hold on. To me, that seems like there's going to be like a very natural divergence of needs or value there at some point. And so I'm also asking for, like, do you think that it's important for DAOs to be built DAO native to start, at least from an ownership perspective? Or? And maybe that's an unfair question to ask because I could see their different products, right? And doodles is not trying to go build a DAO but Moonbirds is right? And I worry, I guess that there's, we're talking about the sort of slash that that many folks have bought into this narrative of being an owner in a collection only to be all of a sudden be seen as a consumer of a collection rather than were an owner. Right?
Reuben Bramanathan 23:42
That's a great framing. Yeah, you can almost feel robbed in that sense, right? You're the you're just a collector or the buyer, you're, you know, you're the user, you're no longer the owner. And I think I totally agree, like that's a natural problem to have, where you've got different classes of different types of owners, especially if you have NFTs and ERC20 token and equity. And, and, you know, so the more that you layer into that the more complex it becomes, and the more divergent the interests of those different groups will be so 100% Like, that's, you know, that's gonna get you into a sticky situation one way or another. I think in general, though, like, Yeah, I mean, the way to build towards that future could take a number of different pathways. But yeah, to that point, I totally agree.
Jess Sloss 24:28
Yeah, I think like the being pragmatic around how you sort of structure those early days makes it makes a ton of sense. It's, it's kind of a love crypto in that everything's immutable. And you know, you have some certainty, and yet so much of this is still like, Yeah, this is the direction we're going and you can trust us that we're going in that direction. And I don't really see that going away. And in the short term, though, I think there's definitely room for sort of trustware to step into that place.
Reuben Bramanathan 24:50
Well, totally, because that's the problem when you have like immutable on chain trustless, but you have mutable social trust required behind that, yeah, there's only ever going to be 10,000 of these, but then there'll be 10,000 of another derivative, and then we're going to launch an ERC 20. And then we're going to raise funding into our equity vehicle, like, the chain didn't lie, but the people doing the stuff might have misled you.
Jess Sloss 25:16
Yeah. And to be clear, we know proof and doodles is examples. They're not in the misleading game. And people bought NFT collections, they sort of evolved that way. But I think for people who are sitting here thinking about building and we can take a lot of insights from the things that have worked so far, a place, I guess, I'm just trying to make or explore this point of like, being thoughtful around the type of organization and where value flows in that organization, I think is ultimately just going to lead to a more compelling project out in the space. And I think in many ways, that's why people are so excited about Nouns is that it's just really laid that they're both like the value of memes, and ownership and clarity there. And I think we'll see more, more success in that direction. And yeah, I'm not super bullish on on those trying to walk that line. But you're essentially saying like, the best of both worlds probably doesn't exist, and we should probably lean into one of them. And, you know, my experience at Seed Club is that we have a lot of restrictions on the types of projects we can participate in because of the structure and that we're trying to do this all on chain. And I see that as an incredibly powerful thing. It means that we get to be really focused, and it's helped shape this world that we're building in such a useful way. I think it's important.
Reuben Bramanathan 25:16
Yeah, I mean, that's why we have the T, in Seed Club LFTG stands for thoughtfully and you only get so many shots at launching something, launching a token launching the collection, and the more times you shouldn't miss, the more diluted your brand and your ownership are going to be it gets messy.
Jess Sloss 26:37
Yeah. So I think one of the early trends I saw you deeply involved in was this idea of fair launches. Right? So I was trying to address some of like the inequalities that existed in token distributions launches through DeFi summer and a bit beyond. And, you know, I think there's probably a number of folks in our current cohort and people out there in the world that are sort of, you know, have this this open question of like, how should I launch a token in 2022? And maybe more specifically, like, how has your point of view evolved over the last year or two around how to go do that? Well, from a community perspective.
Reuben Bramanathan 27:12
I think there's a bunch of different things to think about at the time of distribution or launch and beyond. And it does continue from what we were just talking about, in that if you're launching something that's going to be immutable, it's going to be permanent, it's going to be on chain, you have to think about the different players in your community. So when we were talking about fair launches, in the summer of 2020 DeFi summer, we saw like egregious examples of token engineering, right. And so we've kind of responded to that and saying, Look, if you're trying to build something that's going to be here for the long term, is it capable of being stewarded and governed by users by the community? Is it going to incentivize people to care about this thing long term? Or is it just going to, you know, be designed to moon and then probably plummet after that. So a lot of that was probably more relevant in DeFi, in the context of that kind of financial engineering and tokenomics, which people really employ to drive growth and not natural growth. And I think that in web three more broadly, especially in social and DAOs, and collectives, I think that we need to really look at the values that we've inherited by default from Bitcoin and from DeFi. And ask ourselves, are those the right values that we want to perpetuate in the organizations that we're building? So for example, in Bitcoin, you know, I look at and I say, I see sensitive resistance, I see global access, and I think those are amazing. Uh, personally, I don't see the the sound money narrative as as important as mine. And so in DeFi, you know, the idea of governance, the idea of yield, there's a bunch of those concepts that were super important in DeFi. But why do we bring them into what we're building? Now? I think we just need to be more thoughtful about each of those things.
Jess Sloss 29:04
Let's dive in on that setting. That's an incredible point. How are those things being brought in right now? And maybe an unhelpful way?
Reuben Bramanathan 29:10
Well, if you think about token distributions, and you think about the way that we inherited them, by default from DeFi, which is okay, you have a certain allocation, kind of the team, you have a certain allocation to community treasury, maybe you have investors, and then you have those tokens being used in governance. Governance is a weird word that most people probably never thought about in their careers. And now, it's like this kind of inherent building block in in crypto. And it's only that, you know, a lot of people will know this because of the legal implications of launching a token that might be considered security. Let's not go down too far down that rabbit hole. But governance tokens were seen as less likely to be a security. So you had this thing governance that like, maybe makes sense in the context of certain DeFi protocols, probably not even all DeFi protocols and probably doesn't make sense in the context of DAOs. But we have this default idea that DAOs have tokens, and those token holders vote on everything, right? Like, why did we start there? That's crazy.
Jess Sloss 30:10
So I love that because I think like, I often think of Uniswap as like such an interesting project to look at this lens through, because Uniswap is very clearly a governance token, you have governance over the protocol, and yet it does very limited governance, really, at all ever, right? I don't know how many votes have actually been put forth. And you know, maybe that's a plus for an infrastructure layer, type project. But if I asked her, like, why are people why do people want to hold the Uniswap token? I think it's more because of the narrative and the meme and the idea that it is going to be the main AMM, and so people believe it'll be valuable to be an owner of an unlimited number of these tokens in the AMM and, yeah, I think you're right. And I think I'm guilty of this, too, is sort of leaning on governance as almost a crutch around creating value that even if you sort of dive into that, like, what does that mean? Like there's a whole bunch of other second order thoughts or beliefs that are actually packed on top of that, that lead to the implied value or assumed value of of the Uniswap token that are probably a small percentage is actually that I have a chance to vote and maybe sway a little bit of the decisions that get me on this protocol.
Reuben Bramanathan 31:13
Yeah, a tiny amount. And more likely, like, yeah, we may capture some future upside of fee switches flipped or whatever, like, you know, I think we can see through that the kind of governance token narrative now for for most projects, and we have a chance to reinvent that with DAOs. And with web three communities, because we don't necessarily need to make the same sorts of decisions. And we, you know, have a lot more flexibility in what we're building.
Jess Sloss 31:40
So how are you seeing that? How is that being used right now that that flexibility or, you know, maybe experiments that push beyond governance, as I say, the utility or the reason for a token existing?
Reuben Bramanathan 31:51
Yeah, I think that there needs to be a bunch more experiments. Frankly, I think that what we've seen this transition in the last 12 months with, with NFTs as a base asset, you know, and Seed Club explored a bunch of stuff around that. And that's essentially saying, look, there's a bunch of different reasons that people would hold these tokens, the input that's required, or, you know, enabled from the holders might be different, they might not be uniform, and we're gonna figure it out as we go along. So I'm not saying that governance is inherently bad or that voting is wrong. But just like having that as the default without thinking through it, is kind of worrying.
Jess Sloss 32:29
Crypto is, we just come through with a copy paste phase. Really, right. And I think what's, so I think my time when I got into into crypto, and using that word, specifically, in this case, was very much the late part of the 2017 cycle was early 2017, but late part of that bull market, and I very much felt like I was opportunistic chess, right? Like, what's going on? What can I learn, and the innovation that we were pursuing was really much more of a copy, paste, or maybe an amalgamation of what's worked Seed Club was very much on the other end of that, like Seed Club was before a wave and emerged into a wave. And having sat in both of those seats, I can tell you that it is drastically drastically different. And I see it happening again, right now where, you know, many projects will make a picture or put forth an idea that is anchored on insights that were sort of bubbled up, and maybe in our networks, nine months ago, 12 months ago, six months ago, and that those who have actually operationalize or executed on them have learned the lessons from it and already passed. But people who haven't had the chance to actually get into the execution phase are still hung up on these sort of older ideas. So there's so much copy paste that kind of almost like dirty water in the hole that, I think is in the process of being flushed out right now. And it does. Yeah, I think there's like inhibits the end, I guess there was an incentive to not really have to think deeply about what is the net new or type of experience we're trying to design for here. And instead of just sort of like picking it off the shelf and plugging together and trying to raise some money.
Reuben Bramanathan 33:51
100% I think that's it's natural for people to want to have a playbook to want to have some kind of well trodden path that they can follow for, you know, some part of what they're building. But the thing is, with DAOs, and web three communities, that the thing that we're building is new, it's different, and it's hard, and it's messy. And if there were a playbook, if there was some, like clear, established way of doing this, we would already be doing it like it wouldn't be new. And so I always tell people that it's tough, because as a founder, maybe you're building products, maybe building community, maybe building content, but you want to build that thing. You don't want to spend your cycles, your energy on the organization around the thing, but in DAOs, the organization is the thing. It's natural that it's going to be hard to build. And I think that before anyone starts a DAO or Web3 community, they should be very comfortable with that.
Jess Sloss 34:45
Yeah, it's actually fascinating, the amount of pushback that you get it when you say that the DAO is the product, but it truly, I mean, I think that's a very fair statement to make, or at least it needs to be one of the products you're building. And I think, you know, as I think about some of the lessons that we've learned. And we see our teams learning the surveys in governance. So you want people to come and join your data and you want to make progress towards a big adventure. So you can do that, well, you can get people into your DAO, you know, you can represent them as owners, you can make decisions at that level. But the infrastructure that exists beyond that, to actually make it easy and understandable to reduce information asymmetry to do to make that broader group of people effective at contributing, is just pretty much non existent. And so what we're seeing right now is a lot of teams start to build that out, right. So, you know, whether that's specific types of governance that's being done, or whether that's so you know, I was talking to Thomas from Arkive, last season, you know, they're trying to curate the internet museum. And so the types of decisions they need to make around curate an internet Museum, and so they're building a forum or decision making tool that allows them to kind of go do that. What's interesting is we'll sort of see like the organizational needs, you see this with Seed Club as well were like, how do we actually get meaningful input from token holders on which projects should be admitted. And so the application portal was sort of a first step in doing that. And my guess is we're gonna see that happen more and more, and it's actually going to probably lead to some generalized tools that other DAOs will use. And in many cases, it will just lead to more of a product type experience. And so this idea of DAOs, as the product is really going to be a lot more tangible in the coming months and years, in my opinion.
Reuben Bramanathan 36:16
Sure. Yeah. And I'm not saying that every single DAO is building the organization as the main thing. And it's just one thing that you have to be conscious that you're building. And yeah, I totally agree, there'll be there'll be different models that emerge that become best practices. And it'll be easier over time. But you know, we're still right at the start of this thing. And it's also totally fine. To build a thing that's not in a DAO, you know, there's going to be plenty more infrastructure, and plenty more of these models that let anyone kind of plug and play and just build product or just build content. So, you know, I don't want to discourage founders from from diving into web three. But I think we've gotten to this point where we have this fallacy that everything has to be a DAO and everything has to be DAO native. But we need to get to a point where you can build the thing without building the DAO.
Jess Sloss 37:04
Yeah, and in many cases, building the thing first, even if you intend to build the DAO is the right, right staging of things, right? Because I think like for many folks who are building products in this space, the idea of exiting to community and distributing ownership and the benefits that could theoretically come with that, you know, and having a broad group of people who are really bought in, etc, isn't a very compelling one. I don't know if that's purely ideological or tactical? Or maybe it's a mixture of the two. But I mean, do you think most products that are building in web three, even after they hit product market fit are ultimately going to be exited to community in some way? Or is it going to be cool to sell build a corporation that serves these businesses?
Reuben Bramanathan 37:43
Oh, totally. I think it's already cool. Or it's still cool to to build crypto products in a centralized a Web2, native way, I think there's always gonna be those products that lets people interact with web three without themselves, those products being web three. And that's fine. Like, not every component has to be decentralized. And I honestly, like I think that's a pretty good lens to look at any project through. I think that if you want to build software that's going to help people in web three, fantastic. Like, if it makes sense for that to be decentralized, even better, but you know, don't don't sweat it, if not.
Jess Sloss 38:17
Yeah, It's fascinating, just to think of the, you know, since we're talking about certainly, subcultures are cultural movements, and they are so powerful in crypto, and, you know, you could argue sort of like the core value of so much of what tokens represent today. It also creates this like echo chamber, that it can be incredibly unhelpful for folks that are a bit earlier in their their exploration. And so I think it is important to I mean, it's a weird thing to say, to normalize building and centralized organizations. And yet, I feel like that might be a bit of a spicy take.
Reuben Bramanathan 38:45
Yeah, no, I think that's, that's spot on. And I hope that solves some of the tension that we're seeing, I think this is probably another value inherited by default, that there should be a token for everything, right? That came out in 2017, in that, in that ICO mania, that everything could and should and must have a token. So, I mean, we're seeing that now that like the idea that, like you just said, you should build the thing. And then think about whether it makes sense to build a DAO around the thing. I think that's a good order of operations. And, you know, we generally work with a lot of founders on that basis, I think, probably a lot of investors have fueled the opposite, which is that when token you know, early liquidity accelerated timelines, which brings out the worst in VC.
Jess Sloss 39:30
I use this example quite a bit. But I think it's like, we're firestarters here. And we want something to build and grow and throw off heat and to attract people to be a part of and, you know, gasoline and paper, when you have lots of it can get a really good roaring fire going. But as soon as that gasoline and our paper runs out, don't really have much of a fire left, when others who are building chopping small kindling, feeling the coals can can sort of withstand various weather patterns, etc. And I think it's a Yeah, it can be tough to sort of pattern match or identify people who sort of hold that view But I think it's becoming more prevalent. And that's probably my biggest hope coming through this this wave is that, you know, the news, purely speculative folks get to wash themselves out of out of this world a little bit and get back into a place where there is those, you know, more people who we hang out with on a regular basis, folks who are just like, this is the thing I'm here I'm in it. I'm building for the next 10 15 20 years here, like with that long term, time horizon, what, you know, how does that change your actions and ensure it means that you're probably not gonna go dump tokens on a new founders, if you want to have a long career in funding or working with these incredible builders?
Reuben Bramanathan 40:37
Yeah, I mean, that is a silver lining of this cyclical crypto market that we have, you know, it sucks when things collapse, and it's, it's really sad to see people lose money. But the silver lining is that, like you say, those folks that we're building with, with paper and gasoline, they're gone. And, you know, the folks that are sticking around building for the long term are still here.
Jess Sloss 40:57
Yeah. And for folks who are maybe new here, those people become a lot easier to identify and to connect with and to build with. And so as a byproduct of previous cycle in that way, and as I'm sure we all are in some way. So I think I'm very proud of myself, Reuben, we've got 50 some odd minutes into our conversation without me leaning on the thing that most people want to hear from you. And I think what's exciting here is like most of our conversations, we barely talk about legal stuff, even though you are one of the more legally minded individuals within the Seed Club world. And they've been super helpful on all those efforts. But I think it's, again, almost all of our conversations are exploring these new possibilities, not diving into the legal stuff. But there are a number of things that have sort of happened over the last couple of weeks. And of course, a lot of folks that are thinking about starting projects need to be very cognizant, or at least contributing to projects need to be cognizant of what's happening in the broader landscape. And so I wonder if you can maybe, yeah, like a question that gets asked quite often it's like, at what risk am I for participating in DAOs? And are these internet native organizations? How should I think about it? And I'm curious what what your current way of thinking about that is?
Reuben Bramanathan 42:07
Yeah, I knew we'd end up here. But I'm very grateful for the winding conversation it took to get us here. So yeah, obviously, in the last few weeks, as at the time we're recording this, we've seen enforcement actions from the CFTC. Probably, that's the one we should talk about most closely in the context of liability of DAO members. Without rehashing the specifics of that case, it's important to note that the CFTC, settled with the founders of the Ooki DAO or bZx. But there's still as of today, ongoing action against the broader DAO participants. And that's in court. And so it's, it's still not yet determined, whether those folks will be liable. But obviously, super concerning precedent or, you know, mindset from the CFTC to go after every single token holder who participated in governance, as if those folks operated the exchange. It's also concerning, you know, just didn't go directly after DeFi protocol. But you know, we'll park that for another day. So I think, in general, people have been banging the drum lawyers have been been very loud about this for some time, that there is the potential of unlimited liability for all participants when you don't have some corporate structure. So there's always going to be a spectrum of the risk that you take on when you enter a new venture. And for a long, long time, having a corporate structure was the way to protect yourself against that. And I think for most use cases that will continue. But I think before even going into those specifics, it's important that we think about what a DAO is, like a DAO, like, like we were saying, a DAO is an internet native organization. And that means that it's sovereign, it's independent, and doesn't rely on any state or corporation or anything like that for its existence. I think that's like, that's a very pure DAO. And there's a bunch of organizations which don't quite meet that criteria, but you'd still call it DAO. But if we're thinking about where this is all heading, we're thinking about building censorship resistant, resilient organizations that are going to be here and 100 years from now, and I've got to be internet native, then it's hard to reconcile that with something which relies on a corporate structure for its existence. So that means to put it another way, if you want to be independent from the state, then you can't really rely on the state for liability protection, which is a function of like the laws of a particular government. So on the other hand, if what you want is that protection, then great, you just have to subject yourself to the corporate laws, and being a legal entity within that system. So that's a long way of saying that for some things that are being built. You certainly want liability protection and you probably want some corporate structures. I'll say that the end state of any DAO should not be to have a corporate structure. And that may be a hot take. I think that there's plenty of use cases in the short term, which could utilize corporate structures. But I think the end state of something that calls itself a DAO should not be to have a corporate structure. This is like another hour long conversation.
Jess Sloss 45:14
These are sort of the cases that I think everybody in the space watch pretty closely. And I think, mostly for the precedents that are being set. And I think the, you know, I sort of have I'm of two minds like one, I want nothing more than clarity for our teams, and how to go and build in the space. And I think one could argue, well, if you want clarity, but go build a corporation, you know, I think we sort of established why we both believe that there's work and worthwhile work to be done in trying to pursue these new types of organizations just made to a degree because of the the clarity seems to become from not from being like, here's what you should do, here's what you shouldn't do. And here's how you can build this thing together, but rather, enforcement action in very weird ways, and almost manipulative ways towards trying to build more precedent, I think, in some way, or at least social precedent even because I don't think all these legal precedents are actually being set here, but.
Reuben Bramanathan 46:02
Totally, it's it's very frustrating to see regulators acting this way. I think at the end of the day, though, this is what they're going to do, they're going to be reactionary, they're going to move without any coherent policy, but they're just going to kind of swing their hammer at the particular nails that they see as easy to drive in. So we That's the world we live in. Now, from a practical perspective, what does this mean? I think it does mean that if your DAO is doing stuff that has liability, a significant liability attached to it, you need to have some corporate structure in the short term. That doesn't mean that the whole DAOs a corporation, this is like even another hour of conversation about the specifics, which, you know, one of the benefits of going through Seed Club cohorts is that through the accelerated program, we'll talk in detail about a lot of this stuff. So it's one of the things I enjoy talking about with the projects that go through Seed Club. But there is a spectrum of risky activities. If you're running a ski resort, or a waterpark or something like that, for sure you have liability protection, you have a corporate structure, you have insurance. If you're collecting JPEGs, with friends on the internet, that is a very, very different risk profile. And to say that there's a one size fits all model is so obviously wrong.
Jess Sloss 47:09
Yeah, I love the pitch for a Seed Club there. Because I think what's the consistent thing, at least through all of our work together is just how nuanced all of this is. And ultimately, how the goalposts move quite a bit as well. And so, you know, the fact that I can rely on your and other collaborators brilliance to help sort of make these decisions, I think has been invaluable. And so definitely have to leave it as a tease here, I think not purposely, but just not the venue to be able to get into a useful discussion at that level of detail. But I think I see these happen, I send it to you, and I go, should we be concerned? And I think generally, you are good at sort of describing as you just have here, like the range of sort of repossible realities that exist here. And so I think people need to pay attention. Be aware, be thoughtful, engage a legal professional, obviously, this is not legal advice. We're not your lawyers. I just wanted to say that. I feel like you have to say that a lot. But I feel like I'll say that right now. And yet, you know, hasn't slowed anybody down. So, like, let's go. Yeah. 100%. All right, we're coming up on the hour. And I've been asked by our production team to test out a new way of closing out our podcast and Reuben, since you're the first guest of season three, can't believe we waited to season three to get you on. But first guest this season three, sort of have a lightning question for you. Let me question hot take question. I don't know. You know, I think that's some of the core value that Seed Club provides. And what I'm so have benefited so greatly from is the sensemaking network that we've built here, of which you were one of those main nodes in I'm curious when you sort of think about your sensemaking network, who are those people that are out there, either have been out there or maybe are new to the space or building something interesting that you're looking to, to get sort of signals on the alpha the direction the insights that are making you smarter in in your job, or in your passions within Web three?
Reuben Bramanathan 48:49
Yeah, well, right back at you, Jess, I think that you know, without chilling too hard Seed Club is like a focal point for for a lot of those folks. And I guess my challenge to Seed Club is to like get keep facilitating that make that happen, make those conversations happen at a deeper level, I actually have, I'm still on Twitter, but I've kind of taken a little break because of the noise. And it's an ability to kind of get through to that signal. And I think that those conversations have to happen in like a more nuanced and thoughtful way. Anyway. So that's my plug for Seed Club. And my challenge to Seed Club is to like keep making that happen.
Jess Sloss 49:22
Yeah, I think that's a thing that we've recognized a whole other conversation, we've been thinking a lot about the containers of which we bring people into community where community lives within Seed Club, and, you know, our cohorts a very clear one, but it's incomplete, right? It's there other containers that need to be created to both support alumni as they move into the next phase of their building. But then there's also this entire other world of, you know, 1000s of people who are in our Discord 10s of 1000s of people who are passionate and fascinated about building and participating in the space that we don't have a container for right now. And I think, I think a lot of like, when I think about sharing, you know, I've been working on this NFT is community tokens post forever, you guys, you guys need to be like, Yo, you better to publish that. And I think when I went to sort of explore, where my hesitancy, and some of this sharing of it is, is the venue and is the lack of nuance and is the, the difficulty in encapsulating the totality and of the trade offs and nuances that exist in some of these things. And so it's like, to your point earlier of people saying, well, I want a playbook, and in many cases, thought leadership articles, etc. Like, if done truly Well, I think are writing a playbook. And I go, Okay, well, is this actually effective at being a playbook? That's not me trying to get out of writing this piece? It's coming out, I think we can go to I think there's I think there's better places, I think communities where those things live, I think it's within these containers, where there's trust that exists and, and sort of a promise to, to sort of engage in in a meaningful and optimistic trust based way. So yeah, I agree.
Reuben Bramanathan 50:56
Totally. And yeah, a big part of that is actually like walking the walk that we that we talk in the thought leadership pieces, you know, I agree with you that, that the good ones that those pieces kind of help piece together a playbook. But you know, that's just one person's perspective. And maybe it's only theoretical, but what we see the Seed Club is we actually walk that talk, and we walk alongside all the projects. So, you know, we actually get to see everyone kind of doing it together and actually kind of discerning what what's going to work and not just what should work.
Jess Sloss 51:27
Sometimes I feel like I get out over my skis, or Oh, my God, I have such certainty in this thing. And I feel very uncomfortable in that space. Because I think that's the stance that I've always been in, at Seed Club from day one. And I feel very much that way today, even though we've progressed so far is is this explorers mindset of being like, we have some insights, there's a lot more questions than answers. So how do we, how do we approach making progress imperfectly, but consistently and with momentum, and I think it is a very big difference between like, even the idea of thought leadership piece is like, here's my thoughts, and I will lead you, and I will empower you, and you will do these things versus like, I mean, I often say like, we know what the hell we're doing. I mean, we know some things but like, this totality of things that have yet to be figured out is so great that I don't know how, I mean, I can't honestly and authentically bring myself to engage in these communities without really coming from that point of view of like, standing here with you, let's go figure it out.
Reuben Bramanathan 52:23
100%. If you look back to the start of Seed Club, it was, in some ways incredibly audacious to start an accelerator and a program when we were all just figuring out ourselves, but on the other hand, that's the only way it could have worked.
Jess Sloss 52:37
I think that's we're gonna leave it Reuben. Appreciate you jumping on with me today and sharing with us. What's the best way to connect with you right now? Or if you have an ask of our audience?
Reuben Bramanathan 52:46
Yeah, well, firstly, reach out to me through Seed Club network. I love getting involved. You can also find me on Twitter @bramanathan. And I'd love to hear from you.
Jess Sloss 52:55
If you're building something awesome in the frontier web three socials, trying to build an incredible product in crypto, you should definitely check out IDEO CoLab ventures very proud to have them as partners at Seed Club and for your continued support. So thank you for that.
Reuben Bramanathan 53:10
Thank you, Jess. It's a pleasure.