Corporations For Financiers, DAOs For Informationists
When Andressen called the tech industry to arms in the midst of the COVID crisis, people responded. Why have people even considered his words? Not because he is a great essay writer. Rather because in the tech community Marc Andressen is regarded as a very smart, hard working and talented technologist. Checking all the boxes that make one a legitimate tech leader.
If you follow my newsletter, I've been digging a bit into the notion of legitimacy and its importance for crypto adoption. Drawing a parallel between the legitimacy crisis happning in current institutions — corporations, fiat money, banking system, media— and rising crypto institutions — crypto networks & DAOs, Bitcoin, DeFi, information curation systems—.
Institutions down 👇, crypto up 👆: a legitimacy driven thesis for crypto adoption
Accruing legitimacy is necessary for a social object —person/org/product/...— to become widely adopted
legitimacy is accrued by consistently meeting the expectations and values of a group of people
Traditional institutions have a bad value-era fit. They fail to meet key modern principles
Crypto on the other hand bears many contemporary values, putting the technology forward as a great foundation for new institutions
Online Communities vs. Corporations
Now I want to make things more concrete and draw another parallel. This time we're having a look at organizational forms: the online community and the corporation. Here are the questions I'm interested in:
How did the corporation come to exist, what made it valuable and legitimate for the past two centuries? Who adopted it first?
How can we apply the same logic to online communities and DAOs?
I think this exercise helped me understand what future DAO adopters may look like. It also helps step back from preconceived assumptions we have about organizations and companies and think about why and how online communities are valuable.
Corporations in the Industrial Age 🌠
The corporation model of organising first appeared with the East India Company in the 1700s and was widely adopted much later on, at the end of the 1800s. It went through adoption waves following what social scientists call a social legitimation process.
At the end of the 1800s, building banks and railroads was too expensive for governments and too risky for entrepreneurs. So the corporation emerged as a way for local governments and entrepreneurs to team up on these large projects thanks to corporate charters, elected officers and board of directors which aligned respective interests. This enabled a new type of collaboration.
Partly because of the economic depression that happened in the 1890s, politicians realized it was cumbursome for them to bear with the conflicts of interests and economic risks tied to owning shares in a company. On the other hand corporations were increasingly adopted by the private sector which liked accruing profits while being shielded by the limited liability provided by the corporation.
As the economy recovered from the railway bubble popping, financiers on Wall St. were a key source of funding. What they did was encourage their companies to adopt the corporation model.
The corporation became a standard, working increasingly in tandem with finance. Ford Motor was founded in 1903 and soon became the largest company in the world.
Time: The first corporation —East India Company— existed long before general validation
Power users: The modern corporation went from a public-private partnership to financiers. A group of powerful adopters who elected it as their most legitimate wealth vehicle
Conjuncture: the economic depression of the 1890s was an important event for society to
Value? Values? Financiers? Informationists? Stepping back ⏱
Let's take a minute to step back. The corporation became the legitimate form of organizing for financiers because it matched their values: accruing wealth and capital while mitigating risks.
Since the industrial revolution happened, economic value and finance have been the thing. And the corporate world has become so pervasive that it anchored our understanding of value mostly around economic value. All other values looking anecdotic in comparison.
But value is a very contextual concept. And so if money has been a thing in the past centuries, there were also times were the devotion of peasants and knights were more important to lords than their purchasing power.
Overall, what's valuable is what makes a social group propser at a given point in time. And if we go deep enough, value merely is a degree of importance granted to something.
Now putting this back in our context, while things like devotion and honour will certainly remain in the background, economic value and capital have been losing steam as well.
As corporations evolved from industrial to digital, from Ford to Google, capital has become less and less central to business creation. Instead, success is all about leverage through the intelligence accrued in your product or organization. To me Online Communities structured as DAOs are the next generation of organizations following this logic. A question is what values are they designed from, and most importantly who are their equivalent to financiers?
DAOs for Informationists at the Information Age
If capitalists and entrepreneurs have driven adoption of the coporation, informationists — or should we say dataists ?— may drive adoption for DAOs. They are the ones who incarnate the modern digital values that society increasingly holds. And those for which Online Communities and DAOs make the most sense.
To picture Informationists: they swim in information daily. They administrate and sustain forums, blogs, subbredits, fan clubs, online open source projects and even Facebook groups orchestrating events or social movements. Their job is to create well structured information systems on which information hubs can develop and around which work can be organized in some way.
What informationists are looking for is to grow this hub or network and get people to engage as much as possible. Then from feedback they can tune their sytem more and grow it further. This definition matches the logic of major tech products but goes beyond that point as it encompasses the organization of work itself.
So if I had to make a bet on the best users for DAOs and all the Web3 tools that are being built, I would pick this category of people. As it seems that the flexibility, control and interoperability of crypto tools really enter their information world and their role as organizers and administrators.
The trends behind distributed online organizing started with marginal forums as early as the 1990s. It has now transformed into giant digital fan clubs or headless activist movements or crypto communities and will likely keep spreading as our lifestyles become more and more tied to the digital world.
In my next post I will go beyond values and dive into some of the concrete tools which are now at the disposal of the informationists of our world. Some of them enable the governance of online communities, resources management, coordination, co-creation and even collective information curation.