The opportunity cost of employment
The growth of the passion economy or the creator economy over the last few years and especially over the pandemic has made everyone realise the power shift from corporations to individuals. This realisation could partially explain the great resignation we are witnessing, where employees are increasingly able to negotiate better for themselves or at least able to pursue opportunities elsewhere. Working from home has also removed the need to pretend to be busy till it's time to go home. People can even find themselves in 'micro benches' throughout the day and can hence spend their time productively elsewhere. It is finally possible to approach your career like an investor. No investor would place their bets on a single investment. Having to go to a physical location for work made this impossible in the past but working multiple part time jobs or passion projects isn't a stretch anymore. It has never been easier to collaborate with other talented individuals with common goals and form a liquid super team. This flexibility significantly increases the opportunity cost of choosing an exclusive employer. So today we will explore the infrastructure that makes this all practical - DAOs.
To DAO or not to DAO
Let's cover some basics here, a DAO is a Decentralised Autonomous Organisation. As the name suggests, it is a completely decentralised organisation running on certain rules without human intervention. Think of it as a sub-reddit / slack channel / facebook group connected to your bank account and having a set of governance rules that are automatically enforced. So rather than automating and eliminating the workers, the DAO effectively eliminates the organisation. While we are still decades away from witnessing these kind of DAOs in full force, David Hoffman in his amazing piece describes a transition phase - the DOs or Digital Organisations.
"Digital Organisations are compositions of humans without geographic constraints. Largely hosted in Discord servers (but not exclusively!), DOs are collections of like-minded people with like-minded goals, that work together to make progress towards those goals."
That does not sound very different from regular social media groups you might think. The key difference here is the token. Each DO can mint its own token and award it to members in exchange for labor. Tokens convert the intrinsic motivation of the participants into financial motivation. The members of the DOs inherently want these tokens and provide labor for the DO in exchange for a larger share of the DO. This might sound theoretical and I would have thought the same until last week but I got to experience this first hand. I joined a DO.
I joined a DO
I only recently came across CryptoPunks(yes, I have been living under a rock) and all the rage behind owning one. They are (super expensive) limited edition NFTs. Basically "10,000 collectable characters with proof of ownership stored on the Ethereum blockchain". While I would probably never spend a million dollars to buy one, I noticed Packy's tweet calling folks to 'party bid' on punk #8721 which was up for auction on PartyBid. I quickly jumped in along with a few hundred other strangers and we won the bid. As a result, each member of this party received tokens proportional to their bid. This also gave me a ticket to update my twitter profile picture and signal to the world that I am really cool.
What happened next was the most beautiful thing ever. We quickly set up a Discord server, helped each other out with some of the technicalities and jumped straight into business. With the implicit objective of enhancing the market value of this punk, we stared brainstorming different aspects of the punk, like name, backstory, means of collaborating with other punks / punk owners, sponsorships etc. After all, these jpegs are cultural artefacts that gain value from memes and stories surrounding them. The discord is still evolving with different channels / topics and it has only been a week. We went from being complete strangers to intense collaborators with the flick of a switch. What's most fascinating is the fact that this punk brought together a group of super diverse individuals who would otherwise never choose to work in the same company. This has all been made possible because NFTs have helped convert networks into economies. You can learn more about it from this thread:
Why this works
“Even a billion dollars of capital cannot compete with a project having a soul.”
-Vitalik Buterin
The DO is virtual but the work is real. DOs work because people are intrinsically motivated to join one. They are very much unlike legacy organisations in this sense because they do not require the same amount of time commitment. The other key feature is they work bottom up. There is no boss or super boss telling you what to do. It is an environment where only the best ideas survive and they can come from any member. They are inherently optimised only for the outcome and not for working hours. If all of this was not enough, they also do a great job in aligning the individual's incentives to the objective of the DO through tokens. If autonomy, mastery and purpose are the building blocks of employee engagement in an organisation, then what we have here is engagement on steroids. So traditional organisations have to compete with DAOs not only to provide engaging work but also to match this flexible lifestyle.
Having said that, not having a structure is both a bug and a feature for emerging DOs. Legacy organisations are really good at division of labor. How are traditional organisation structures designed? Organisations have a common vision / aspiration / goal which translates into a strategy. The tasks required to execute this strategy are then shared across people with the required capabilities. These people are then held accountable to demonstrate their capabilities through key performance indicators. This is why very large DOs do not tend to be effective - they lack proper division of labor and role clarity even though its members are super excited to be there. I was able to observe some of this on my own DO. In other words DOs need leadership at the risk of looking like a centralised institution.
It is exciting because this is just the start and the possibilities are endless. Apart from DOs, NFTs have also been game changers when it comes to content creation. We all create work content on a daily basis. Not necessarily in the form a blog or a novel or anything like that but the simple text messages to co-workers, a few lines of code to open source projects, a small audio sample in a larger audio soundtrack etc. NFTs now enable monitoring and rewarding granular level contributions like never before. This could particularly come in handy for well documented work like programming. Imagine a line of code so useful it gets copied all over the place. With NFTs, its creator can now be proportionately rewarded. So yeah, digital native organisations are blurring the line between work and play and are taking us closer to making the 4 20 69 workweek a reality.