So far, what does DAO rely on for profitability?

If we do not take the issue of making money seriously, DAO will be a very short-lived experiment.

Accepting Tough Decisions, Yielding to the Greater Good

In the web2 business world, achieving stable profits often means making ruthless decisions about product releases, hiring and firing employees, how to use runway funds, and the company's direction. While not all web2 organizations operate this way, these decisions can certainly leave a stain. This feels centralized and off compared to the open-source, public goods, and positive-sum spirit of web3.

However, these decisions need to be made at some point to build a sustainable business. Unless you're very lucky, I believe you'll need to make many tough decisions to achieve genuine and sustainable returns.

For DAOs, hard decisions are tough because compromises are often needed to push proposals to a vote, and compromises are not hard decisions but rather a "both somewhat happy, somewhat upset" decision.

How can DAOs embrace "yielding to the greater good," choosing a path forward regardless of agreement, instead of circling looking for non-existent compromises? Especially when advancing something requires quorum and voting thresholds?

One approach is to keep the majority of decisions within a small team responsible for the DAO's funds and critical feedback. Then, let a few decisions go through a voting process - but these should be major decisions that require serious debate and discussion.

Keeping the majority of decisions at the guild/team/small group level is a good way to drive the organization forward quickly. However, these teams still must yield to the larger DAO members, token holders, and decision-making groups in the organization to secure funding.

Then, you'll have a pyramid like this:

Then, make the toughest and most critical decisions at the DAO level, keeping topics and minor issues within the team. This allows the DAO to focus on a few hard decisions rather than many.

Once decisions must be made at the DAO level, it becomes even more challenging as it takes longer to reach consensus. So, only the most significant decisions should be retained. Just like this inverted pyramid:

Another way to handle hard decisions in DAOs is inspired by Teal philosophy: when an organization faces a threat to survival, key leaders can solicit feedback and advice on an idea on a large scale to develop solutions.

Having contributors share responsibility on this issue - finding a profitable way forward - can help inspire new leaders.

"When employees are fully involved in the suggestion process in a crisis, they are asked to share the responsibility for tough decisions and trusted to contribute. This is an empowerment that helps the organization evolve."

-Reinventing Organizations Wiki, Crisis Management

Simply put, "We need to find a way to make enough money to pay our core team Y while doing X." This is a powerful way to drive conversations about profitability. Leaders will emerge, and new solutions will arise.

Having a visionary CEO isn't a prerequisite for running a great company... having many great leaders is.

There's a common idea in web2 that a visionary CEO is a necessity for a company's success. Steve Jobs and Apple, Bill Gates and Microsoft, Elon Musk and Tesla, Mark Zuckerberg and Facebook are all hailed as elite visionaries. The skepticism of web2 business leaders towards DAOs is because DAOs lack that single visionary.

To me, this is like saying a great country needs to be ruled by a monarch to function - I don't buy it.

Companies are such a new thing that I believe, in terms of best practices and standards for companies, we're still in the divine right of kings phase: at best, we're in the 14th century.

I believe the idea of a visionary CEO is more about relevance than causality. In our complex, unpredictable world, in a complex network composed of other factors and motivators, it's nearly impossible to attribute causality to a single factor. While these CEOs are indeed talented in their technology and leadership skills, I believe we're moving beyond this stage into a new, more democratic phase.

For me, DAOs are not leaderless: they have multiple leaders with different backgrounds and experiences. These different leaders can set the tone for the organization's direction, rather than being a puppet.

And as long as they unite around the mission rather than dividing over their understanding of the mission, these leaders can even lead the DAO to accomplish a larger mission than a single leader could. This is where "yielding to the greater good" comes into play, prioritizing the organization's progress towards a true goal over personal egos and viewpoints.

Linking this with profitability, it's crucial for DAOs to have a genuine goal that leaders can rally around. If many self-serving purposes are competing for resources, then the DAO will never make enough money to continue paying its core team. A unified mission is essential for profitability.

The concept of public goods is sometimes applied to things that are not public goods... hindering revenue generation.

One of the most revolutionary ideas in the cryptocurrency space is using cryptocurrencies to fund public goods tax-free. But not everything we're building in cryptocurrencies is a public good.

I believe much of our public goods ethos has permeated everything in the DAO space.

In DAOs, we act like a public good by avoiding conversations about how to make money. We don't know when or how to enter the conversation because it feels off. When we try to be Regen, it feels too Degen. And since DAOs attract many like me who enjoy debating theories and ideas, this isn't necessarily a bad thing, and we might be circling for years in a forum post.

In a recent issue of "I Pledge Allegiance," Hasu talks about how DAOs often give all their profits to token holders without retaining any tokens to operate their business and generate profit. They hope these token holders will reciprocate by becoming active contributors or participating in governance, but the reality is most token holders simply sell the tokens.

In this scenario, it's crucial to clearly define the DAO's mission and position in the ecosystem early in the organizational creation process. Is the DAO building a public good and funding a small core team to sustain its operation? Does the DAO aim to deliver products, earn profits, and hire a large team? In DAOs, making such key decisions early on is vital.

While we're in the ownership economy where users have unprecedented power and ownership, DAOs need to strike a balance between this and making enough money to support their core team. If we treat every DAO as a public good, taking care of the core team will never happen.

"The future of work doesn't have to suck" - the best thing I heard on Twitter

I had a conversation with some DAO service providers on Twitter Space, and the best thing I heard that day came from Cokie, the founder of Twali: "The future of work doesn't have to suck."

Because right now, if you want to make a living as a full-time DAO contributor, it's undeniable that the future of work will suck.

You might be jumping between multiple DAOs, trying to earn bounties and play a range of roles. You're dealing with coordination nightmares and endless meetings. You're struggling to advance on a career path rather than go with the flow. You're paying out-of-pocket for healthcare costs and might find it difficult to get a mortgage to buy a home.

The future of work doesn't have to be like this. That's what motivates me to work every day to make DAOs better.

And profitability is a big part of it.

We, the literature and history nerds, will find the answers. But we can't figure it out if we don't reference past enterprises, cooperatives, governments, and corporations.