The Weekly Distillation No.40
DAOs; Feeding Hungry Children; Mental Health; Surveillance; Subscriptions; Babies; Silk Road
Photo by Alina Grubnyak on Unsplash
Welcome to The Weekly Distillation. This is a newsletter that seeks to distill the noise and help you be informed, provoked to think, and inspired to create as you lead in life and in your organisation.
This week’s newsletter was sponsored by One Feeds Two.
One Feeds Two™ is a not-for-profit set up to reduce child hunger. It adapted the ‘buy one, give one’ model to work across the food industry as a whole. When a consumer buys a product or a meal with the One Fees Two logo on it they are not only feeding themselves but providing a school meal to a child living in one of the world’s poorest countries, paid for by the food company. They have now been able to give 12 million meals to hungry children. Get lunch - Give lunch. Amazing - get involved if you can.
“The simple idea that every time you sell a food product or meal you can give a school meal to a child living in poverty is a great example of using business for good. What better way to tackle one of the world’s biggest problems than by uniting an industry around a common purpose that will help to make a difference to children’s lives.” - Sir Richard Branson
Quotes
“Success is not final, failure is not fatal: it is the courage to continue that counts.” - Winston Churchill
"I am sorry it has come to this [but] we will do so if we have to" - French Maritime Minister Annick Girardin on threatening to cut electricity supply to Jersey to resolve a fishing rights dispute, which led to the UK sending 2 warships to sail next to the Island of Jersey, off the coast of France.
"I'm very happy. My wife and the babies [five girls and four boys] are doing well." - Mr Cisse after his wife gave birth to nine babies this week. Nine (9).
“I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I had not lived.” - Henry David Thoreau
“I do not believe that civilization will be wiped out in a war fought with the atomic bomb. Perhaps two-thirds of the people of the earth will be killed.” - Albert Einstein
Skim it in a minute
An Oxford study found that social media is apparently not harming the mental health of teens.
I cancelled my Audible subscription this week. Amazon has created the best cancellation experience ever - I must have rethought my decision three times before I finally cancelled. You should cancel just for the experience of how good they are at retaining you and managing the churn. Have your subscriptions taken over your life?
German Intelligence services are now actively monitoring Covid conspiracy theorists. Whilst Russia continues to meddle in European politics, this isn’t entirely a surprise for European Governments to take this approach. It raises obvious questions on free speech and civil liberties however.
A Deep Dive - DAOs
Photo by Samuele Giglio on Unsplash
Once upon a time……settle in and let me tell you three stories
1) I once went to a meeting with a drum band that march at the front of activist protests. I was scared. I thought if they found out I have been an evil capitalist banker in my career then I may get strung up. (This is ironic, as I once had a very civilised chat over a beer in Austin with Micah White, who founded Occupy Wall St). Why was I meeting these people, who turned out to be pretty normal humans with different perspectives? I was part of a group that gave away someone else’s money with a loose aim to fund projects that did good. We received applications for £5k each, met the applicant to hear more, brought a proposal to a monthly dinner and then gave them the money with no strings attached. No reporting, no KPIs, no restrictions. Very random. And very powerful. (As an aside, One Feeds Two was a beneficiary in its early stages - one of the grants that definitely went to a good cause.)
2) In the little village I grew up in, there are windfarms spring up all around. As part of the approvals of getting the windfarms approved, the owners of the turbines have to make annual payments for c.25 years to local community councils. This is throwing tens of thousands of cash to a little village that suddenly has to generate ideas of what to spend it on, or to independent grant giving bodies that have the responsibility to allocate this funding appropriately.
3) I sit as a Trustee of the small church I am a member of. This means that I and the other trustees are to think about how to steward the assets well. But do we represent the members well? Do we use those assets to serve our charitable purposes optimally? I hope so - but is there a better way?
Triggered by a comment
This week’s deep dive was triggered by an article from IDEO commented on by Dave Blanchard, who runs Praxis in NYC. (p.s don’t ever think that comments on LinkedIn are worthless!) It caught my eye and led me down a rabbit warren of articles, white papers and definitions for 5 days when I should have been asleep. I have long been fascinated by how technology (in particular the internet) transforms business models.
The four areas of a product’s life
In life, it is often said that artists imagine, businesses create products from that imagination and governments regulate the businesses. It’s overly simplistic, I think now it is:
Imagination - Artists / Futurists / Idealists / Prophets
Creators - Entrepreneurs / Activators / Visionary / Starters / Apostles
Builders - Engineers / Businesses / Developers / Delivery / Charities / SocEnt
Governance - Regulation / Controls / Infrastructure / Services / Tax & Rent
Motives vary - for Imagining it is often idealism of a better world, for creators a combination of idealism and money leading to pursuit of transformation, for builders it is money and proving, for governance it is about sustainability, equity, control and sometimes profit too.
At each stage there is a need for capital - speculation (or grants) at imagination stage, seed or venture funding at creator stage, equity and banks at builders, and equity, tax, debt and money printing at the governance stage.
First, a quick recap on the technology building blocks
Photo by Thought Catalog on Unsplash
If you are a crypto king, and grasp DeFi, DAOs, ETH and BTC then skim this quickly. For me, I need to start with how all this works before we talk about what it means. It begins with the much loved Blockchain technology.
Think of an accountant’s ledger - a transaction happens and someone writes down who bought what, who sold what and what the net gain is and where it goes and when it happened. Imagine that, in every transaction, held on not one computer but in the case of Bitcoin, on 10,000 computers as a full copy of that ledger. And the code that runs the ledger is not owned by one party but is open source and therefore transparent and not easily changed without consensus. This technology (and there are many Blockchains - one article I read from 2019 said there was 861, another in 2021 said there were 30 - so when people talk about THE Blockchain you can now correct them) enables the sourcing and proof of any transaction (financial, social, physical) between two or more parties. This is having a big impact in transparency of the supply chain (which honestly, is not something that I yet find very interesting).
Now we understand Blockchain, the next step is to go back to our four stages above and remember the imagination segment. Many people got into Blockchain and then Crypto Currency as they saw three ails in society:
1) Those with power will keep printing money and destroy the currency and as a result any savings we might have. #inflation
2) Those with power will use technology to control and monitor us and not give us the freedom to live in the way we want, to spend money how we want and where we want to spend it. #surveillance
3) There was too much centralisation of power in the hands of authorities, regulators, governments, central banks etc. There needed to be a democratisation of society. Hand back the ability to allocate wealth and governance to the people, and away from evil capitalist bankers and governments. #controls
Whilst this is where we started, it rapidly changed and moved into Creators & Builder land, and is now venturing well into Governance land too.
Crypto currency, such as Bitcoin, rely on Blockchain technology but allow you to transfer your own money (fiat currency) into a crypto currency (Bitcoin, Ether, Dogecoin etc). This currency is created by “mining” (read more here if you want) to generate new currency and the currency can be used peer to peer. There is no central bank, limited regulation and arguably relatively little real-world applications. A raft of currencies have been created, the most recent fame went to Dogecoin which was supposed to be a meme but has somehow offered spectacular financial returns in 2021.
And from Crypto, there are other decentralised technology solutions. Three that matter - DApps; DeFi and DAOs. DApps are decentralised technology applications running on Ethereum, the blockchain under the Ether cryptocurrency. DeFi is decentralised finance and focuses on those apps in the crypto or blockchain world that focus on reinventing financial services and products. DAOs are decentralised autonomous organisations.
DAO - the organisation of the future?
Whilst I was preparing to write this newsletter today, Moneyweek helped me out by publishing an article on DAOs entitled “Big Tech on steroids: why the 2020s will be the “decade of the DAO”. I felt I had been scooped, one of my friends felt this showed I was on point.
A decentralised autonomous organisation (“DAO”) is an organisation (until recently, not even a legal entity and I will come back to this) that exists on a blockchain (Ethereum being the favourite) making it decentralised, with its governing rules encoded into the organisation’s blockchain (smart contracts) and that as decisions are made, the smart contracts kick in and the decision is implemented quickly, efficiently and without nuance.
An example:
A DAO is created to provide grants to community projects across a city
Interested people buy in to the fund by acquiring its token in exchange for other crypto currency
Proposals are submitted by members of the community. This usually requires a deposit (refundable on a successful proposal, along with a 10% incentive fee to the proposer) to stop people spoofing the system with ill thought through proposals.
The community is given a number of days to vote on the proposal. If the vote passes, the smart contract kicks in immediately and processes the impact of the decision.
How to create your own DAO
“DAOs are a way for like minded individuals to collectively band together and solve common goals.” - Bankless
If you want to create a DAO, then this link sets it up nicely. If you want to find a DAO you can join, start here. The chart below lays out the DAO ecosystem in Nov 2020 - it will have significantly expanded since then.
DAOs - my unanswered questions
What is their legal status? DAOs will soon have legal entity status in Wyoming (“Blockchain Valley”), but what about outside of the US?
Will you have to pay tax? If you don’t exist in a state, how can you be taxed? Who pays? The DAO or the individual?
The DAO only has value if the crypto currency you can exchange it back into has value, or the assets you buy with your token have value. If crypto, do DAOs fall?
By disintermediating the agent/manager, we lose their experience, network ad social capital. Is this an issue?
How does a DAO deal with an inbound issue? E.g. a project is backed but the backers come back with complaints or negotiation points.
How can it be ensured that the proposals and governance will be compliant with the legislative environment?
How do you stop a large holder of votes skewing the vote? Should you?
How do you stop fraud and money laundering?
What does search look like for DAOs? How do you find them?
Do DAOs work best for those that have convening power?
Because of the need for tech literacy and access to capital, are DAOs another way of benefiting those that have, at the expense of those who do not?
DAOs - imagine the possibilities
Photo by Ante Hamersmit on Unsplash
Here’s what has got my mind buzzing this week on the possible applications of DAOs:
A venture fund at a local level. The tech community gets together to fund ventures they believe in
Community groups who wish to pull their resources for the benefit of the community.
Families - I explained DAOs to my family over breakfast today, using a yoghurt post and four strawberries and an example proposal of what we might all want. Families could bring their extended family on board and allocate donations, loans, investments or even making decisions
Government - apparently some libertarians see that DAOs could lead to the end of the state.
I work with 100+ Christian entrepreneurs around the world, including a lot in N India currently. These entrepreneurs could pool resources and allocate to who they wanted to fund
A whisky fund could be created to invest into bottles, casks, parcels, companies or indices. Fans of whisky could create a diversified portfolio of assets without having to create a fund manager.
A DAO could be created in areas where communities needed to be underground.
On the -ve side, the anonymous, distributed and autonomous nature of DAOs mean it is also perfect for terrorist groups to route money or drug lords to make payments to their networks.
Conclusion
DAOs are in their early stages but expanding rapidly. As ever, legislation and policy is taking time to catch up. There is significant scope for DAOs to transform how organisations function in some areas. Start learning! And let me know if you invest in any and what the experience is like. If you get interested in my ideas for DAOs, let me know….who knows what might be possible.
Additional reading list:
Neptune raises $20m to be a DAO VC to DeFi
Powering the automatic enterprise
A venture fund with plenty of virtual capital but no capitalist
DAOs, DACs, DAs and More: An Incomplete Terminology Guide
Venture DAO opens up access to early-stage crypto projects
Gorilla DAO: The beginning of a billion dollar organisation
Blockchain for Decentralized Autonomous Organizations (DAO): Covid-19 Impact
The “Autonomous Corporation” Called the DAO Is Not a Good Way to Spend $130 Million
What I am reading
This book was a recommendation from my friend Sundeep. It’s a fascinating lesson in history from a different perspective, helping you see how trade, ideas, religions, warfare and empires played out across Central Asia and the Middle East, and the longer term implications of that. I find history interesting for where it shows up why things happen nowadays that were rooted in decisions made decades or centuries ago, but also for a way of learning where others have succeeded and failed in similar challenges (albeit in different settings and without an iPhone). The book is incredibly well written and is deeply engaging, providing insights into the ‘Stans, the Roman and Ottoman empires, Islam, Iran and Russia - unsurprisingly many of these remain live global issues today in slightly different forms. Well worth a read.
Last week’s newsletter received around 8x the amount of views that The Weekly Distillation normally gets. Thanks to anyone who forwarded it on to the thousands of people who viewed it, I had several great conversations off the back of it. Opportunities to sponsor the newsletter exist and I am also seeking suggestions for future Deep Dives. Thanks for reading, sharing and feedback.