Soon Companies Will not have CEOs. It’s Decentralized
DAOs will govern the business and decision-making process.
I predict that in the next 15 to 20 years, we do not have a CEO position.
We may still keep the title, but it is only a face for the business and mostly a marketing tool. Very similar to what Vitaly is doing for Etherium.
But before we go deeper into what will happen in the future and why, let’s have a look at what happened in the past and also what is the philosophy of governance and why DAO (Decentralized Autonomous Organizations) will be the future.
History of DAO
The report’s institutional biases are clear, such as equating progress with Western liberal democracy, and its narrative of societal evolution may appear reductive at best. Its argument, however, provides a historical background to the political ideology from which decentralized organizations draw, knowingly or not. This is most apparent in the report’s identification of the newest organizational form: networks.
While networks have existed throughout history, new information technology emphasizes cooperative relations that greatly impact institutions by cutting across jurisdictions.
NGOs are the perfect and of course, a primitive example of DAOs.
DAO stands for decentralized autonomous organization.
DAO comes from imagining how features of decentralized technology, such as global digital assets, censorship resistance, and automated actions, will change how organizations operate.
DAO to indicate “unstoppable”, or censorship-resistant, businesses.
The first DAO, called The DAO, became one of the biggest spectacles in the Ethereum blockchain community to date when in 2016 it raised over $150m equivalent in ETH as a decentralized venture fund. However, the experiment proved short-lived when The DAO was hacked one month after launch.
In 2021, a DAO could be described as a voluntary association with the operating principles of digital cooperativism. As voluntary associations, they are a cross-jurisdictional way for strangers, friends, or unlikely allies to pseudonymously come together toward common goals, supported by a token model, incentives, and governance. Members of a DAO can have representative ownership of its digital assets through a token, which often simultaneously acts as a governance right and network utility.
DAOs are now a set of tools such as a group chat (Discord channel) and a bank account.
I also saw an Icecream NFT based company that had the vision to be the first fully decentralized retailer in the world.
It supposes to be a DAO enterprise in which the members decide what products to offer, which cities the company should expand to, what should be the values of the company, choosing the CEO, and essentially making all those strategic decisions.
Indeed, it turned out it was a rug pull.
The good news was I lost only $200.
But I learned a lot about DAOs.
Returning to their origin, DAOs today resemble TheDAO mainly in their emphasis on open participation and economic value creation.
Let’s dive into the philosophy of DAOs.
Because DAOs use early-stage software tools, it makes sense that their first users and use cases would involve the governance of digital assets, such as software protocols.
A strong DAO community or business must have the following attributes:
- Voluntary and Open Membership
- Democratic Member Control
- Member Economic Participation
- Autonomy and Independence
- Education, Training, and Information
- Cooperation among Cooperatives
- Concern for Community
DAOs could set more thoughtful norms around democratic member control, which cooperatives typically define as one member, one vote.
Most DAOs employ token voting, that is, one token, one vote. DAOs reason that token ownership represents stakeholdership, with the token model often directly economically tied to the DAO, for example through fees on software protocols it owns.
However, the downside of this approach is that the rich people in DAO, will get more voting power and that essentially put DAO’s control under a few minorities.
In this context, for DAOs with the mission of economic value creation, a token becomes a useful mechanism on three fronts:
- Bootstrapping Funding
- Distributing Governance Rights
- Aligning Ecosystem of DAOs
What will the future look like
In my humble opinion, the future belongs to DAOs.
Even now, CEOs are just there to execute what the board of directors is saying. Now imagine if the board of directors of Apple, become iPhone holders.
Each iPhone holder (or each Apple ID) becomes a shareholder and member of the board.
Now for any strategic decision to be made, people can form more focused groups to discuss the results of decisions.
Technology can help here as well and visualize the consequence of those decisions and help the decision-makers to get more clarity.
In the end, those decisions can be put into voting for the extended members, and then the company is mandated to execute those decisions.
Also during the implementation phase, members of DAO will be able to track the progress transparently and also review the KPIs so that in case of any shortcomings, they can make proper secondary decisions.
I guess the question will be, how the centralized competitor can influence these decisions and how they can benefit/lose moving forward?