During my second startup adventure I incorporated as soon as we had a great idea. We really wanted to let the world know that we were serious about inviting people to rent their private homes. It did seem like a crazy idea. It took over one year to turn that idea into a website that was up and running. The costs of having a company was the main reason we were burning money. The overhead that came with being incorporated was as high as our revenue when the site started generating the first bookings. Airbnb launched two years later. We survived the storm but it was a hard hit when they started chasing our niche market. #surfbnb.tv is still online (free now).
Start looking for funding early on as very few ideas quickly turn into profits
That's something I already knew during my first startup adventure, however we failed because the investor, an iconic entrepreneur in Europe, decided to set up a political party and backed out last-minute. Twenty years later he said, during a TV interview, that he regretted not pursuing "his" idea to launch "YouTube". Being early does not always pay. We did earn respect by being featured on the Apple.com homepage as video streaming pioneers, and were offered 30-inch cinema screens.
Anyway, back to the idea of setting up a DAO. A legal advisor tweeted: "If an idea looks to become a full-time job and as soon as you have customers and you are signing bills and contracts, yes then it's a good time to incorporate."
He continued: "Creating a Delaware C Corp or LLC at the early stage seems silly to me. Instead you probably want a DAO Charter, or similar, that makes clear the 'rules of road' before things actually get interesting and there is a potential of 'public facing liabilities'. At that stage, yeah sure, wrap that profit-generating DAO into a Delaware C Corp to help against risk of adverse legal actions." #notlegaladvice
I think in most cases a strong case could be made for DAO Tokens not being securities at all, since the token would have immediate utility both in terms of curation, as well as in governance of the project itself. Since token holders would be governing the project and responsible for its success or failure directly, it should be in pretty defensible territory. I'm not a lawyer, but have been following the regulation around tokens pretty closely. - Luke Duncan
Questions about Foreign-Owned U.S. LLCs Answered by a CPA
No point incorporating when you do not have sufficient funds to make it happen.
"A DAO is an internet-native entity with no central management which is regulated by a set of automatically enforceable rules on a public blockchain, and whose goal is to take a life of its own and incentivize people to achieve a shared common mission." Luis Cuende - Aragon
"DAOs collapse the cost of creating and managing organizations by replacing slow and expensive paper contracts with fast and cheap smart contracts. With lower costs and higher speeds, we unlock new levels of organizational scale. We can have a larger number of small organizations where setting up a legal entity is far too expensive to be worth it (think larger than a facebook group, but smaller than a company)" Joel Monegro - Placeholder VC
You can decide whether membership tokens are transferable or not, require users to “stake” tokens to submit proposals or set the rules for vault management.
DAOs offer the tools to build infrastructure by attracting funding, rewarding good work and making decisions together.
It could be used to run a non-profit organisation, or as a way to fundraise for your startup, or could just be your own personal DAO. The level of decentralisation is also up to how you set up your Aragon DAO.
Everything is open source and Aragon provides a full developer framework complete with user interface tools. Web3 developers can create entirely custom DAOs, plug-ins for the Aragon Client (e.g. invoicing, payroll, tax, or accounting tools), and even invent new governance templates for others to use. For example, you can imagine “data co-ops” that better distribute the value of user data.
1Hive's Dandelion Organization template is intended to help facilitate collaboration by providing an organization structure that makes it easy for contributors to part ways when disagreements occur. By guaranteeing that participants can exit if they disagree with the decisions other members are making, dandelion organizations are more easily able to attract capital investment. RageQuit is the secret sauce.
The dandelion organization template consists of the Agent (optional), Finance, and Token Manager apps maintained by Aragon One. As well as the following applications developed and maintained by 1Hive:
- Redemptions: Allows users to manage a list of eligible assets held within an organization's Vault and allow members of the organization to redeem (burn) organization tokens in exchange for a proportional amount of the eligible assets.
- Token Request: Allows users to propose minting tokens in exchange for a payment to the organization, subject to the approval of existing members.
- Time Lock: Allows an organization to require users to lock a configure amount of tokens for a configurable amount of time in order to forward an intent.
- Dandelion Voting An enhanced version of Aragon One's voting app which implements an ACL Oracle which allows an organization to configure permissions that restrict actions based on whether an address has recently voted Yes.
The Dandelion Organization template and component Aragon Apps have been audited by Consensys Diligence
When you are ready to onboard members into your organization you can direct them to the Token Request app to submit a request for membership shares.
DAOs will change the future of work.
"DAOs allow individuals to invest into projects (via effort/resources/funds) at their earliest stages, way before VCs are able to invest. Individuals are able to go where traditional VCs can't. They can get early exposure to projects when there isn't even a company/legal entity. When there's only a GitHub and a chat room perhaps. Pre-core team, pre-deck, early stage meme investing. We'll see thriving communities form around DAO-first token projects before there will be a pitch deck.
DAO Shares will be allocated from day 1 in a meritocratic manner where there will be no longer founder pre-mined tokens or company equity. Everyone in the project will request DAO shares for providing work or capital. Everyone will invoice for their time, energy, effort as well as funds provided. Unfair projects will fail to attract and incentivize contributors. Contributors are now able to leave DAOs permissionlessly with their rightful economic stake in the DAO. (An Aragon template featuring Moloch-style "RageQuit" functionality is fundamental to protect contributors)
Grow community + incentivize contributors via DAO -> form core team, create a game plan -> professionalize + setup legal entity -> only then take outside capital.
Source: Peter from MetaCartel Ventures / Venture DAO (Ethereum’s first ever community run seed fund, run by founders, operators and angels. An experiment focused on mixing: VC + open source + internet community culture)
The sorry state of crypto UX
Paying for gas, signing transactions, creating a MetaMask wallet, onramp, offramp … It doesn’t even matter how amazing Aragon is, the crypto UX has a long way to go. It is tempting to vertically integrate it all ala Apple and make sure the UX is top-notch. However, that misses the point of Web3. Companies like Wyre, Ramp, Mooni, Fortmatic and Aragon are all working hard to fix the sorry state of crypto UX
Continuous Securities Offerings
This is a fantastic evolution of the continuous organization. This system designed by Fairmint uses a bonding curve which interfaces open-economy to a project but rather than offering decision-making rights, it essentially offers a share of future revenues through their revenue commitment mechanism. By far, the best UX & UI.
Decentralized Autonomous Associations
The DAA is a basis particularly for non-profit projects with limited financial resources looking for a legal structure with a bottom-up decision-making process. This new variation is the concept of Decentralized Autonomous Associations that takes roots from the Swiss Association legal structure (Libra structure). The Swiss Association has lower startup hurdles than a Swiss Foundation. In the context of the DAA, the autonomous activity focuses on certain membership-related functions, which is a realistic scope that doesn’t risk slipping into the abstract during implementation. Swiss legal firm MME has documented a process to allow DAAs to exist, aided by a set of smart contracts that Validity Labs has started to codify.
Oh, and one more thing ...
We should simply start calling DAO's "Smart Companies" #smartco