Investment DAOs in Adolescence - Lessons from the Early Days with David Palmer, Victor & Aaron

yeah yeah all right good afternoon everyone thanks for coming I'm really excited to get the opportunity to moderate this great panel about investment Dows I've had an opportunity to work across several Dows with some of these really early Builders and innovators and so I'd love to just get the conversation started just hearing from uh from Victor and Aaron about kind of their experiences with investment Dows and maybe a brief intro so Aaron if you don't mind kicking us off a brief intro about yourself and maybe uh just high level your experience in investment Downs yeah absolutely thanks so much Danny thanks so much for everybody in the panel hey everybody my name is Aaron Wright I'm the co-founder and CEO of a company called tribute Labs we've helped launch and support a network of 22 Dows um I've just been in crypto for quite some time I was fortunate enough to play a role to help launch ethereum I did a lot of early work around consensus with great projects like chain link and also a whole bunch of others that were very early in the space uh our our Dows are really focused on supporting different projects we've at this point uh supported about 250 projects they've also collected about 30 000 nfts and uh there's been about 85 almost 90 000 ether that's been contributed across all the Dows it's been really great they kind of run the gamut of the entire ecosystem so we have dials that support companies more like a venture uh based uh Dow we also have a bunch of dows that are focused on collecting different assets so that could be things like Flamingo Dow which collects Fine Art and xx which is a similar one it could also be different tiles that are focused on other verticals from digital fashion to music to uh kind of runs the gamut the way that we've kind of approached it is starting with much smaller groups that are more curated off the bat these groups are making decisions in a very flat nine and hierarchical way so there's nobody that's in charge there's no committees a lot of the kind of I think Concepts and ideas around ours that we heard in the last wave you're not going to really find them in in our Dows and it seems to work pretty well it's not perfect and I'm sure we're going to talk about a bit about that uh but dads are great I think they they're performing as well if not better than kind of expert driven organizations and I think what's really interesting is that they're all organized around topics instead of around experts or given personalities um and they're kind of lightweight ways to to play around and support things that you're really interested in so it's been a great experience uh there's great people in all the Dows including Danny and Brian and Vanessa and the folks from Hydra so uh it's a it's a wonderful ecosystem so Jump On In yeah that's great thank you so much Aaron um and I guess uh I could I've had the pleasure of uh participating and being active in a tribute down Ready Player Dao and um it really is uh it's it's great to be building in the sandbox with Innovative people that are uh all taking the swing at trying to to coordinate through these new mechanisms um and uh investment structures and so I think um maybe another kind of OG in the investment uh Dow World Victor here from metacartel uh Victor do you mind giving a quick intro and maybe a little bit about your experience here uh with Venture does sure yeah uh so my name is Victor rodfette I was one of the founding members of metacartel Adventures in uh spring 2020 um with the Lao we were the two uh first legal entity for-profit Dallas uh that were that were operating in the space and so I think we kind of uh were exploring some blue ocean kind of um conditions uh medical televentures was comprised of Builders and some VCS and some funds we were really trying to figure it out as we were going along we were run by a Malik contract we had essentially like very flat governance rights and uh you know we deployed about uh 20 million dollars in the last three years we've had a chance to invest in about 75 different projects and we figured out a lot of different ways to handle uh problems that arise inside of Dow organizations recently I've also been part of the launch of a fund of funds Dow called Hydra that's designed to incubate and invest in other investment Downs we're trying some new experiments with incentives and uh and design to help shape the investment dial space and I'm really pleased to be a part of the panel with everybody here yeah that's great thank you so much Victor I think maybe we can start just getting to the intros with some of these other other panelists who I don't know as well as I do with Victor and Aaron who I work with on a regular basis so maybe Vanessa do you mind maybe a brief intro and like what's your exposure in in ventured out and what's that been like for you hi everyone my name is Vanessa gourlay I am the general partner and an investment fund that invests in early stage web 3 we deploy across you know pre-seat seed and series a and I'm personally involved in a lot of investment Downs so I'm part of pleaser Dao I'm going to join one of Aaron's Dao and as an investor I used to be at coin fund and we we also invested in these down structures so I personally invested in Aaron's company and we invested in Syndicate which is a company that allows you to spin out Dow infrastructure and that allows to create these investment clubs and so it's really an exciting place for traditional and investors even though we're three investors to be part of those dials either personally or as a fund because we get to tap into the collective wisdom of the Dow members into what is new and coming what are the new projects that are coming out there and it allows us to also meet very early some entrepreneurs and have direct access yeah that that's awesome I feel like it's so important to have traditional uh traditional members coming into uh web3 and exploring our what we're doing whether that's on the coordination front or on the fractionalization and so I'm curious maybe before we move on just to keep it kind of in the flow uh what's what's your experience been like coming from a more traditional investing environment and kind of jumping in it sounds like head first into these investment dials so I think when when we invest out of the fund we have really a clear investment thesis we have clear Target returns that we want to achieve and sort of you know we're looking at specific prices Etc and I think in the Dow you need a lot of you you need to accept a lot of flexibility and a lot of more Serendipity into that because it's human coordination with really novel projects and you don't really know what's going to come out of it and you know it could work out really well and it could be that the Dowry pivots so it you need to be flexible enough to be able to invest there that it's outside your investment thesis but you still trust the process that the outcome will be interesting for the fun yeah absolutely I love that and I think we'll kind of keep moving along here um David why don't we go ahead and move to you David's doing some really interesting stuff um he's summoning his first Dao and we'd love to get an intro and to hear about what you're up to and your experience there thanks Danny I actually can't hear a word anybody's saying so I think uh I'd like to congratulate Victor for looking so great today he's brought he's brought the whole panel uh fashion statement up up a notch so I'm here to talk about democratizing sport our first effort is in sale GP we're bringing in 1950 investors to become owner fans of the first professional sport team we're doing it through a hybrid structure we're using a tokenized LLC that's wrapped by a dow for governance and engagement and we hope to be on the water in June in Chicago for season four of sale gp's fourth season yeah that's great it's so great to see um all the Innovation around how how to best integrate web3 um coordination mechanisms like the Dow into more traditional business structures as we kind of try to bring um Dows into a more accessible framework for people to adopt so I'm wondering if you can kind of give us your perspective as like a first time Summoner about what was that what was it like for you maybe some challenges some good things or well I think the first challenge is that a Dao in and of itself is a general partnership so from a liabilities standpoint you're not going to be able to have an equity investor want to take Equity risk Without Limits of liability so we had to bridge that Gap by creating a tokenized LLC that's wrapped with a dial for governance so we had to create a hybrid structure that allows for equity limited liability but still the engagement that a dow provides with governance with participation in the day-to-day ups and downs of sports team and fandom sports team ownership and fandom so we had a compromise to a certain degree to be legally compliant and Bridge the investor Community here we're raising 35 million dollars so there's a certain scale that we had to to bridge but still bring the benefit that web3 can bring which is transparency with on-chain decisions and governance so that was really the I think the Innovation that we had to get to to be able to do a scaled investment yeah there's there's it's so it's so interesting because there's no real standard uh way to structure these vehicles just yet there's so much uh exposure and risk um and unknowns and just on this panel just from my experience right we've we've got tribute that has their own framework and they've run that Playbook and improved it across 22 000 now and then uh just with Victor metacartel um you know in Hydra Ventures and that's um that's a more Master feeder fun to fund structure and then we have a Wyoming um like hybrid structure it's there's just um those I feel like that's a big surface area for uh making things hard and unaccessible but almost like the necessary um the necessary hard work uh to kind of like dig through the mud so I appreciate that um and lastly but not least we've got Brian over there um Brian we've chatted briefly but I don't know you too well so I would love to for you to introduce yourself and maybe tell us a little bit about your experience thanks anyway Brian I've been a member of tribute doubts for going on four years now um beginning most notably with the Lao so from the inside I have a Dev background and I've also built some dapps in this space over the years but my main focus is with the Laos and being a as much of a contributor there a note on how our process goes it was very much very loose at first compared to what I imagine the traditional VC world as you say would be so we really Forge ahead and try as members to figure out this governance steps and it's been very experimental and we but we end up sort of hammering out processes to make decisions better and faster as a group so Aaron dubs at the hive mind coming together not only do we uh find the gems out there by putting our heads together but we can come up with like decent governance processes as well it's surprisingly because we are a disparate brunch coming from all different backgrounds and it's it's uh but I think that's a part of unnecessary that diverse background group is uh is what brings you know the hive to the mind and that that power so there's power in that power to the doubt yeah yeah I mean I think that's the one thing that we've learned and I'm great I'm glad to see that you're formed in Wyoming I was uh helped out and drafted that bill so I'm glad to see that happening but I think the the big thing at least what we're learning with investment uh making Investments together in a dow structure they can be flatter they can be looser and by organizing around a topic you can build what we internally have been calling like a hive mind with people with all these different backgrounds they could be Builders developers they could be enthusiasts about a particular topic they could be traditional investors but getting that mixed together you actually make better decisions and actually operating at arm's length and not necessarily being in the same room maybe not even knowing each other off the bat you don't have the same group think that I think you see in frankly traditional venture capital and you can move faster right because you're doing it kind of part-time you're using all these tools you're able to kind of move at the speed of a blockchain there's no there's not necessarily you need to put together extensive deal members report back to LPS because all the members have skin in the game right so there's not this moral hazard problem that we saw kind of manifest and I think net net if you if it's done well you have a group that's able to see around the bend faster and quicker and in a more agile way than a traditional structure which kind of makes sense right because we're mirroring out kind of the core logic of a blockchain and a good example there at least in our network was Flamingo Dao which was launched before really anybody was talking about nfts so that was a big wave if you talked like two years ago to all the folks at things like East Denver they were super geeked on D5 they thought nfts were dead like a little tiny fad but inside the loud there was a core group of people and it wasn't everybody right so it's almost like a brain like it was like a memory of this like this concept called an nft and some people still thought it was interesting and there was enough people that wanted to scratch in there so we were able to support great projects in their initial seed Capital rounds like super rare and art blocks and you really kind of name it and then that led into creating a new dial called Flamingo that was able to support all these great amazing artists and creators and then it kind of has become a self uh perpetuating ball until we're starting to see kind of gaming assets and gaming opportunities kind of emerge from that too so kind of this organic growth and development is something that's really nice and on top of that it's like a great way to meet people too so like most Venture capitalists I think you know they're not may not even be friends with their Partners but in a lot of these dials you develop really close relationships because you're chatted through a topic that you really all care about which is kind of fun too I wanted to add something because traditional investment clubs have always existed you know you get together with a couple of friends and you look at opportunities and then you decide to invest or not you create spvs and those are really different in terms of like your engagement and also what you get out of it because you're not investing individually in each project you've invested in the Dow and a Dao invest for you so you are incentivized to be really proactive and bring all those deals to the Dao and that changes the dynamic compared to traditional investment clubs I would say where it's like one-on-one and it's more individualistic okay I hate the term investment Club I think it's offensive right I actually I'm going to say something a little spicy I think anybody that's called an investment Dow an investment Club they missed the mark like when I look at metacartel ventures and its members like these are folks that have been in this ecosystem building bleeding out you know all the amazing parts of what we're building they know a thousand times more than any venture capitalist a traditional venture capitalist and it's the same in these doubts these are not clubs right these are people that are building and creating and they're able to like actually see and know which project should be supported are they going to be right all the time absolutely not but are they more right than wrong the answer is yes they are right and they're seeing it faster they're seeing it better and frankly the return profiles are exceeding what you're going to see in most uh Venture Capital funds so when you hear a VC talk about an investment Club what you should be really thinking is holy [ __ ] they're worried about their job because in reality this is the model for the future because it's it's meeting the internet kind of where it is which is based on interest it's having skin in the game it's having people that are actually experts not like a former product manager at Uber and that's great that your former product manager at Uber but what the [ __ ] do you know about web3 like what the [ __ ] do you know about ethereum they don't they just literally bought eth five years ago sat on it watched it go up and then claim that they're experts they haven't done as much as many of the folks that are in these Dows so that uh I hate the word investment Club yeah no trigger me totally no I love it I love the fire and um I want to hear from from Victor about uh I would love to hear kind of what you think about um that comment that Aaron made about like the the investment Club I'll give you a second here because I would like to like put a take here and I love a few things that have come out of Aaron's mouth and from the panel so far specifically the the the concept of like these super networks um of uh of people with diverse expertise rallying around a topic um in an emergent um space I think that's you that's a unique unlock I think and it it comes with the ability to make um really good investments in an area where information is extremely um fragmented uh difficult to find and difficult to make decisions on and so um the the Dow the Dow model on like the investment side of things I think that's one of the best features of it is kind of like this search engine of ideas towards like Optimal decision making I think in uh specifically suited for this type of time but that definitely comes with um with its challenges right but um I think you see the successful groups are those super networks like what uh tribute Labs is network of dows that's some of the best people in the entire space that have been here for a long time same with metacartel um uh these are just uh original Builders who have high contact High expertise and so I'm wondering um I'll tee you up here Victor with maybe like if you have any responses or additions to the current conversation or maybe if you can kind of talk about my comment or maybe some of the challenges that that you've kind of uh had to work through um and maybe that you're trying to solve now in your experience here with metacartel and investment house yeah sure no I second everything that Aaron said I mean I think um the notion that these are communities first uh comprised of people that really do care about it is a really huge asset to the space you're seeing things you're building it you're sensing where the space is going that's been a huge Advantage I do think that investment dials as as a dow form are really the tip of the spear for actually trying to figure out how best to use these new forms of human organization um if you remember back to 2016 the Dow one of the greatest black eyes in ethereum history was an investment dollar intended to be I mean they didn't actually make any Investments but there's something natural about you know people using pooled funds to make Collective decisions using this tool set and I think that the you know there's a Timeout on on Dows until we finally figured out how to reboot them in early 2020 but I think that there's something great about the notion that people have skin in the game when they join an investment down and that they have a pretty clear Mission typically to make money right there's there's some other missions that are there but at least you have something that's a a North star and I think a lot of community dials protocol dials um have more trouble because they can grow in different directions they can have different priorities they can have different sets of members come in and either you see like attrition of interest and nobody's voting um because nobody has skin in the game or you see essentially capture by a loud group that wants to pull the protocol in a very specific Direction so investment dials at some level because of those constraints of trying to make money and having skin in the game like are really able to push forward these things and one of the one of the major things we've encountered over the last few years in medical card cell Ventures was uh free rider problem issues so the way that we were set up everybody contributed capital and you got shares according to that capital the work that was done to find deals to do the due diligence on the deals to do the portfolio support um to do internal apps within the Dow there was nothing that was built into our original uh construct that actually would you know reward anybody for that so we had to construct something that helped try to understand how to if not punish Free Riders I mean we talked about the idea should we just be purging people that aren't active um should we be you know like giving people crazy bonuses should we be taking shares away and you know we ended up settling on kind of a slow steady dilution where where inactive members lose out uh little by little every quarter by rewarding their shares to other members that contributed but it's a really interesting space and there wasn't anything that was that we could draw on as a as a corollary from traditional organizations and um I mean there were mental models but there wasn't a playbook for that so it's been really fun to kind of just uh sense where the Dow was on that kind of detect how much rage people felt about the free rider problem and then try to you know come up with solutions that fit uh kind of a rough and census for that so that's one thing that I think I'm particularly proud of and one of the things that we we really kind of spent a lot of time working on inside of McD that's awesome thank you um I I feel like we've got some there's a lot of how Dao we we all spend a lot of time solving like how do we Dow how do we make it better every day because we find challenges and that's like what we've committed to because we're committed to the Dao as a um as a social coordination mechanism that when added to what we've already done is superior for us I think and so it's uh I feel like I would love to hear like why Dao from maybe someone like David uh because David you uh this is your first one I'm curious what what made you want to jump into this kind of crazy world and add add a Dao or a web 3 component to a more traditional uh thing like the sports team ownership yeah the dial structure if you're if you think about managing a distributed network of of individuals around a common cause the Dallas structure is quite an efficient way to organize governance and so we really got there from you know how do you bring 1950 people from all around the world on a common mission to operate a sports team a business and give people transparency with governance so it was a very efficient way for us to figure out how to govern how to create engagement and how give people a ownership stake that is separate in effect you know what is it ownership there's ownership of equity but ownership from the mission mission ownership is critical to create that type of connection in fandom and the dollar actually allows us to give people voting rights governance rights participation approval of budgets approval distribution of cash and Victor and I talked about this way what do you ultimately do if you build cash in a business and what do you do to distribute that you know there's that's obviously an equity ownership issue but it's also a mission ownership issue you know do you want to invest in another team do you want to reinvest in the business um that the Dow structure allows disparate people from around the world to combine and execute an efficient fashion as opposed to really the other mechanism is you're basically using email chains right but an on-chained system of governance allows a transparent mechanism that ultimately allow token efficiency and trading and people having confidence in the business that the decisions are being made for the benefit of the mission and benefit of the ownership yeah that's great um I love that thank you so much for that perspective I would love not to just lob around like hot takes but and to put you on the spot but Brian I'm wondering if you have like a um why doubt like maybe why do you think investment towers are important or um maybe a web three component investment clubs investment clubs yeah I love them I'm I'm forming an investment club right after this yeah why are investment clubs the future um I you know what right from where I stand I mean our roles as uh looking at Investments is trying to figure out what what is the future what is the space the future of the space um this is such a a new form that's emerging and just taking off now and much under the leadership of Aaron Wright and his team it's it's been a great experience thanks to the ogs and metacartel for foraging the way what does it look like in five years I have no idea um but I think we're going to come to find the solutions to these hard problems at some point whether it's like incentivization from within um that's a big nut not to crack but I think there's some people working on that that are um that's coming up with interesting Solutions I see I think we'll see that come into play and that'll be a big factor um and then we'll see how they uh interface with the real world continue to put the rubber meeting the road kind of thing uh going forward like uh with the legal rappers that the that the lawyers get up to over here um that's the amazing work so that's that's another big part of like making these actual recognized entities um is a way to uh uh engage with the traditional world and the uh the business world as it stands right now and I think that's another key part of it going forward so we'll see what happens it's exciting to be a part of it yeah I mean I'll give you my two cents on why does and I think the real meta Trend that's happening is we're just moving away from corporations right corporations were invented for the Industrial Age they were hierarchical ways to organize labor to organize capital and now we're edging you know year by year deeper into the age of the internet and the internet is not hierarchical so Dao is just mirror and match what we're how people are organizing their Affairs online and like we talked about before the reason you're seeing a lot of traction around people working together to collect or invest it's a clear objective you can start these groups a little bit smaller work out the Kinks and a little bit like how we scaled compute I think over the next you know 5 10 15 20 years we're going to learn new things new ways to coordinate people together and these groups are going to scale out and you're going to see larger larger groups online not just getting together to talk to one another to advocate for a particular cause but to start really flexing the muscle the internet and that is the meta Trend and it just happens to be starting with the original Dao experiment just in its kind of revived form and I think that original Dao experiment was actually quite hierarchical right and what we're instead seeing is an ecosystem approach to solving some of the same problems but it's going to be a great thing right and all the early experiments we saw with other types of dows like the ones at Sea Club were talking about before or even things like Constitution Dao I think that that will eventually happen but it's just a little bit two steps ahead right so we're going to be sitting here figuring out these hard problems how do we get different people working together how do we solve some of these governance and other mechanical pieces and then they're going to scale up just like all of software and in the process it's going to change every single industry because sitting behind Hollywood there is capital account sitting behind Wall Street there's Capital allocation sitting behind the music industry there's Capital allocation sitting behind the fashion industry there's Capital allocation this is the engine that kind of fuels Innovation and we just have the best tools now and what's great is that markets tend to be efficient and efficient markets win in the end so stay tuned for the next panel next year right I just want to add I agree with absolutely everything you said and I just want to add my own personal one more component to it which is that like being in Dallas is fun you know like it's a great way the people that you mentioned earlier the fact that you're encountering new challenges the fact that you know there's new technology you're hearing from new people you're constantly like wrangling with new issues you're solving internal incentive and organization issues and I think that's like it's really uh compelling so if you are thinking of joining a dow and you're not certain go and find out and it's really interesting stuff and you really like enjoy the time you spend there because of the way that you're engaging different parts of your brain there's a lot of cool incentives um but yeah I think there's definitely like an internal you know satisfaction that comes from being in a doubt that for me is different from being part of more traditional organizations totally well hey look I think I'm getting a side eye here from the organizer and we're definitely over I could talk about this forever I got I got tapped in here last minute to just moderate and I wouldn't miss this this is a great conversation some of the like most incredible people in the space that I've ever worked with watching them do what they're doing and being part of it um as we all do our part uh to kind of express our vision you know it's great um it's very encouraging and I'm excited to see what everyone's doing so thank you so much for coming on and thank you for having us thank you Dan thank you