Andrew: Hey there. Freedom fighters. My name is Andrew Warner. I’m the founder of mixer G Where I interview entrepreneurs about how they built their businesses. This is not a regular Mixergy interview. What you’re about to hear is the start of a brand new podcast.
Here’s what happened? And entrepreneur that I interviewed years ago came to me and said, Andrew, I want to do better job of explaining what my company does and why I’m passionate about this business. Would you interview me about it? And I said, sure. I’ve actually done that over the years with several people that I’ve interviewed here on Mixergy.
The thing is. By the end of the first interview with him, I got really excited about Dow’s decentralized autonomous organizations, these groups that Ben’s putting together. So I did another interview with him and then another one. And then I asked him to introduce me to people who created other dowels and to help me learn more about the space.
And these recordings. I turned into a podcast episode. I actually wrote up, um, some notes on them, which I had no idea they published on their blog. By there. I mean, origami that’s Ben’s company, which creates these decentralized autonomous organizations. I fricking hate the name of it. How decentralized autonomous organization. I feel like they could do a better branding job with all that, but.
The organizations themselves are really exciting. How group of people who often never met each other can come together and. Create something that wouldn’t have existed without them buy an island in one Dallas case, or start making investments in startups in. The case of orange, a Dow you’re about to meet here or valley, frankly, just some art.
It’s been really interesting to me and I haven’t shared it here. And then I realized, well, if I’m so excited about it, that I created a brand new podcast on it with origami the company that creates Dao. I should tell you about it. I would want to know. I did want to know more about it. That’s why I interviewed Ben.
And so I’m putting this first episode of the origami podcast here for you to listen to, and to see if you get as excited about it. As I did. And if you do. Come join me. Subscribe to the new podcast. You can get it at mixergy.com/dao, D a O decentralized autonomous organization. And frankly, it’s always, you know, if you don’t like it, or if you have anything to add or any feedback or do love it so much that it’s not enough to just subscribe, email me and let me know.
Um, andrew@mixergy.com. Okay. I’m going to stop with this intro and I want you to hear the actual introduction that I gave to the podcast episode. Here it is.
Andrew: I read a few articles about Ben Huh and how he helped get over a thousand Y Combinator founders together into orange. Orange is a DAO, a decentralized autonomous organization and orange that DAO finds, invests and supports entrepreneurs. I never understood how he did it until this interview. And in this interview, he’s going to walk us through the process for setting it up.
The interesting thing is that once he got past the hurdles and the difficulty of setting up his own DAO, he decided that he’d make it easier for others to create DAOs. That’s why he co-founded Origami.
Origami is a platform for the most ambitious DAOs in the world. If that’s you, he and his team will work with you to design your DAO, to give you the best software for it and to set you up with best practices.
As you listen to my conversation with Ben, I’d like you to pay attention to three things.
First, the basics of setting up a DAO. We don’t get into the deep mechanics of doing it but we do get into the why the purpose, the reason why is he and why are others so excited about do.
Number two, you’re going to hear why a community is more important than the founders of a DAO. And in that section, notice the unexpected way that Ben got millions of dollars for orange because of its members. You’ll see, I even got shocked when he told me in this interview.
And then finally, I’d like you to notice the weird additions that Ben added to his DAO.
My name is Andrew Warner and I’ve known Ben for years. Going back to when he ran Cheezeburger, it was a massively popular collection of meme sites that kept going viral.
And I’ve known him, uh, even after he sold the company. And for years afterwards, I’m excited to learn more about what he’s doing at origami and the opportunities that are here for all of us with Dows.
All right. But let’s start with the setback that he had that let him down this path
Andrew: Good to have you here, Ben.
Ben: Thanks for having
Andrew: before we even get into the DAO you ran a company called social construct that was backed by Y Combinator. How’d you get into that?
Ben: Y Combinator under San Altman, had a moonshot project to build new cities. Is very YC like go do big things and important things in the world.
I emailed someone at YC and I said, Hey, can I. I’ve got nothing else to do. I just wanna like help out, uh, next thing you know, I was actually running the program and so I ended up working at Y Combinator, not even in the program, but just like being an employee.
Andrew: You were helping them come up with big ideas for how to revolutionize cities. You actually went to the border of Syria as part of this project, because?
Ben: If you had to imagine how cities would be built from the ground up for the 21st century, how would it work? It used to be that cities were built on riverways or trading routes and things like that, but where is the biggest need today? And one of the ideas was maybe it’s the refugee camps because they tend to stay for decades and the infrastructure’s terrible.
And so if we can use technology to help them build their own internal economy and to build their own town, uh, that would alleviate a ton of human suffering. I ended up going to Jordan to go visit Sattari the, uh, giant refugee camp for Syrian refugees.
Andrew: How did that end up leading to you? Starting a company called social construct.
Ben: You realize just the limitations of what a technology company can do, and how you will end up inserting yourself right in the middle of like the geopolitical hotspot of the world. And so I was like, Hey, we are just not well equipped to do this.
I came back home and I said, “Hey, we have a housing crisis here. Um, what is the root of the housing crisis?” A lot of people blame policy, but even if policy tomorrow decided that you could build anything you want, there was a huge labor shortage.
And so we’re like, aha, there’s something we can do. We can increase the productivity of construction. can we build software to automatically design a large scale apartment building?
Yes, we can actually can we create hardware that makes labor much more efficient so that we can literally snap a five story, a hundred unit apartment building together. And so let’s go work on that. And so that became social construct,
Andrew: How much money did you raise?
Ben: 17 million.
Andrew: What happened to the business during COVID.
Ben: We were halfway through the construction project, using new technology called CLT. COVID struck. And basically everything ground to a halt. And so we have this like giant carcass of a building and we knew that costs were spiraling outta control because everything was gonna take three times longer.
And we had a limited amount of money and we were supposed to go out and raise our series B on April 15th, a month after COVID struck, uh, the lockdown struck here and we were kind of screwed.
Andrew: that basically wiped out the company.
Ben: Wind downs are very kind of lonely, slow, you know, depressing parts
Andrew: How depressing, what was it like for you on a personal level?
Ben: You, you lose confidence in who you.
Andrew: mm-hmm
Ben: , it’s difficult to get out of bed in the morning when you don’t believe in yourself.
Andrew: you literally would stay in bed.
Ben: Yeah.
Andrew: And then some friends of yours though, get into NFTs. basically these images, which people are buying and selling and they come to you because you are the guy who was the meme. Lord. I mean, you’re the person who had.
All the different meme blogs. I icon has cheeseburger, cat blog, the fail blog, and so they come to you asking for what,
Ben: they’re like, Hey Ben,
Andrew: Okay.
Ben: you help us figure out what’s gonna go viral? Can you help us figure out what has cultural value? Can you help us? You know, Figure out a process where we can actually come together and put some money in and buy some JPEGs.
Andrew: What kind of expertise did you bring in to help them figure out what art to buy and which JPEGs they should be investing in?
Ben: Um, none. Literally none. I mean, these are not memes. O obviously they have cultural artifact and cultural value, but the value of an NFT is vastly different than the value of a meme. You can use a meme, ORIC tactics, and virality to get NFT, to become more popular. But most people who build NFTs have no idea how to do that anyway.
So it wasn’t like I was gonna go and be like, oh wow, they’ve got a great viral program. Like, it wasn’t any of that. However, I did have some time on my hands and
Andrew: and
Ben: that might have been the best mistake that they ever.
Andrew: Why’d you have to go and create your first.
Ben: Yeah. If so, uh, my friends like to call it live action role playing, right? So we LARP’d DAO. We built a Discord, actually, a friend already had a Discord. We were hanging out there anyway. So we’re like, we built a section inside someone else’s Discord, and we’re like, we’re gonna come together. And as a group, this decide and vote on how we’re gonna work together.
It’s funny because, it was like a bunch of people wanted to get together and buy something and I’m like, “hello! I would like to add some bureaucracy!” Right. And I’m like, I’m not really good at bureaucracy. It’s like, I’m a startup person. Like the I’m the opposite of a bureaucracy guy. But, um, what was fun about it was like, we could say, Hey, instead of holding your interest in this group, in the form of like, an agreement or note or something that we just agree that we hold a share.
Um, why don’t we actually turn that into token so that your token would represent your ownership in this DAO because you put in, you know, 10 ETH and you get 10 tokens for every ETH you, you put in whatever it is. And based on that, um, you have a voting power. You can actually have decision making and influence that is voted through your token stake in the DAO.
Andrew: Maybe part of the reason why you created a DAO was you’re in crypto to learn about crypto.
Ben: Yeah, I’ve been crypto curious for a long time, you know, because of my other work, I wasn’t able to actually spend a ton of time diving into it. I’ve made a bunch of crypto investments. They’ve worked that well. Um, and I was like, okay. If this is the truly the future, and I know very little, how the hell am I gonna learn?
Am I gonna ask people? Yes. Is that gonna really give me the expertise needed to build my own company? No, I’m gonna have to just go build it. And, um, what better way to experiment on building something than on your friends?
Andrew: I remember you telling me that you nearly lost everyone’s money at some point what happened?
Ben: There’s a tool that every DAO kind of uses on Ethereum called Gnosis Safe. And it’s a way of actually pulling capital together into like a safe where you, you know, deposit money you need two signatures to withdraw any of the funds.
So it’s called a multisig it’s actually safer than putting it in somebody’s individual wallet. And so we. Like, I think at the time it was like $150,000 together into that’s, safe. And then there’s a little button that says upgrade and we’re like, cool. Upgrades are good. That’s upgrade . So we upgraded the safe and it turns out that the user interface didn’t work with the upgrade.
So in crypto, there is the backend, the contract, and then there’s the front end, the UI. And sometimes they go outta sync. And so we were trying to withdraw money to go buy something and we contacted nosis and we’re like, “Yo, yo dude, this upgrade that you guys like wanted us to do, is preventing us from we’re drawing our money.”
And they’re like, “oh, cool. Yeah, we’re gonna ship a fix. It’ll take like three weeks.”
And I’m like three weeks. Like this whole cycle might be over in three weeks.
Andrew: Meaning everyone might be over this whole NFT thing.
Ben: oh yeah. This like, how little, how long did the tulip mania last? I don’t know. Like, we’re like crap. Like, we’re gonna have to tell all of our friends that, um, we’ve just lost their money. We’re gonna have to start a new company or new DAO.
Andrew: So what’d you do to end up getting past this.
Ben: It required that we ship some new code. And luckily among my friends, group, there are some really good, Ethereum developers, the three of us got together, um, and had to actually do some very unsecure things, um, where we’ve to expose our private key and things like that.
So these are like big no-nos, but we trusted each other. And so we have to ship an upgrade to the contract ourselves to get the money.
Andrew: It was called CrisisDAO right.
Ben: Uhhuh CrisisDAO. Yeah, it’s still around, still going strong. It holds a bunch of JPEGs one of the things that people forget is that the technical solution , is not the only part of the solution. There’s lots of other parts. And the thing that you have to put first in a DAO are the people in the community
you can’t just ship a contract and software that says, we’re gonna work like this. You have to have a human readable contract or an agreement that says we’re gonna abide by these rules. And this is how we play the game of operating in a DAO.
Andrew: For example, what did you put into it?
Ben: uh, Well, Lambos were kind kind of popular in this part of the cycle.
yeah, and this is how, you know, if somebody’s read the contract or not. Right. Uh we’re like one of the requirements is that once we have a large exit that everybody’s required to buy a Lambo
Andrew: Okay, this, and this is not typical in a DAO. You’re just saying, look, we can make this as quirky as we want. We just have to lay it out ahead of time. And so Lambos, if you succeed is one. What about responsibilities? What else went into it? Resolving conflicts roles.
Ben: resolving conflicts, um, what are the different roles like who, like, how do you actually get people to do work for the DAO? Right? What are the different responsibilities? How do you actually prevent a small group of people from taking control of the whole thing and running away with it? Right?
Because obviously if you give them keys to a kingdom, what are they allowed to do? What are they not allowed to do without permission
Andrew: all right. This is such an amateur question, but is this a Google doc that it goes into, or is it into the actual software of the DAO ?
Ben: As you can imagine, writing smart contracts is, a highly skilled, sought after skill set. So what you do is you create a Google doc where everybody decides that, yep. We’re gonna abide by these human rules. And then as you become more mature and have the time to develop. The sections in those smart contract, you can say, great.
Now this smart contract will replaces this section or that they’re in sync, right? This, this human readable English words, map to how the contract works.
Andrew: Okay. And, and so in the beginning, it’s a Google doc that says a Lambo needs to be purchased. If you, if you make it big, eventually that becomes a line or some code.
Ben: Could be so here’s how we would do it. Okay. So, um, there’s an operating agreement that says, we all agree that once we hit a billion dollars in valuation, that we would all purchase Lambos out of our shares. Okay. That’s an English part. We then have, um, in the distant future for maybe in the near future, you may be able to purchase options in a Lambo on, on chain.
So you buy an NFT that represents an ownership, stake in a lamb. Right. And it’s available on chain. And the smart contract says, if these conditions are met, we will transfer these tokens into this account who will then purchase these NFTs and airdrop them to these addresses. And all of a sudden you can now redeem this NFT for Lamborghini.
And it all happened back in the background automatically.
Andrew: All right, all this is the technical and kind of the legal part of this. Let’s talk about community now. You’re all friends. One of the things that I’ve heard happens when people create a DAO is you give people ownership and it goes from being a set of friends to a set of business partners who have friendship benefits, too.
Talk about what happened there.
Ben: The moment you actually tokenize a community, you’re encoding the rules of the game and the influence. Or the voice of those members using tokens. And so now you have to actually record these votes
somebody said we should buy these thing called SuperYetis. It’s controversial. Um, and so we had to vote on it and the voting period actually takes some time.
And what set in was FOMO. People are like, we don’t have time to take a vote. We need to buy these right now.
Andrew: Okay. What did they end up doing?
Ben: This is always funny, but among friends, the moment you set out a set of rules and you agreed that you should all agree, uh, with it. The first thing that happens is your guys can’t abide by those rules. We’re gonna have to break them . And so they’re like, “this, these SuperYetis are, are going fast and we can’t wait for the votes to conclude because when they do, they’ll all be sold out.
You can always buy ’em in the OpenSea, on the secondary market, but we. Yo it’s gonna, the price is gonna go up. I’m like, I don’t want these. I don’t really wanna do this, but like crap. All right. I will put on, put up more money to buy them on behalf of the DAO in the hopes that the proposal passes so that the DAO will buy it off me.
Right. Just for the same price that I paid for. I’m not marking them up. They’re just like, I’m just like willingly giving to the DAO so that the DAO can actually have some assets that it wants. and there’s a bunch of us in the DAO who are like, don’t do. We just agreed to these rules. Please don’t do this.
You’re just gonna violate all the rules on day one, but I’m like, but the community, but, but we wanna do this.
Andrew: And so you’re taking money out of your own pocket for something that the community wants to do despite the rules. And despite the fact that you just lost millions of dollars.
How did, why Combinator alumni get involved in all.
Ben: I was in the summer 17 batch of Y Combinator through Social Construct. So that project became a company. It spun out as its own. so I was part of the YC community and I was like, Hey, there are some serious limitations to how DAOs work. And I actually wanted to explore how to create a much more scalable DAO where you could have unlimited numbers of members yet, raise outside capital.
And so these are like, you know, fundamental problems in the way the law works, not in the way the DAO structural works, but, you know, if I can figure this out by talking to lawyers and other experts. , um, it would be cool to create a very large community of talented entrepreneurs.
And so, uh, I created a WhatsApp group of NFT degens, um, for Y Combinator alumni. And it was just blowing up real fast, like lots of people joining. And it was a lot of fun because. There’s no quite degenerate this, uh, as people buying JPEGs on the internet would fake money. And so I was like, okay.
Then I learned that, this other person named Don Ho had a older community of YC crypto, fans. And it was, much more professional than my, degen NFT DAO. on WhatsApp. I go to him and I was like, “Hey, can we merge the communities together here? I think there’s a lot of interest. There might be some interest for some, special purpose vehicle, like a little million dollar investment fund to actually go invest in the crypto companies in this current batch of Y Combinator.”
And so, you know, within a 72 hour period, I think we ended up raising 850 K. We weren’t taking any upside.
We’re not taking any carry. We’re just doing this out of the joy of actually, putting a community together. And then we ended up investing in, I think, 11 companies in that batch who are crypto.
Andrew: Okay. So it’s a bunch of you just day trading JPEGs, just day trading pictures, talking on WhatsApp, getting each other fired up, but also learning about the whole crypto community, the software what’s necessary. You’re starting to see what, what works what’s necessary. You raise money, $850,000 from whom to invest in companies within Y Combinator to do this.
Ben: From the people in the WhatsApp group,
Andrew: So you go back
Ben: they’re all
Andrew: group and you say, Hey guys. Instead of investing in these JPEGs, let’s invest in the companies that are building the infrastructure to enable people to buy more JPEGs and do bigger things this is the amazing part about Y Combinator that the alumni on WhatsApp would kick in money for you to do this.
All right. So you now have the money. You invest it within how long? Couple of weeks.
Ben: I think it took five days Don and I were, or we had tickets to Burning Man.
Andrew: Okay.
Ben: There’s like a week between the end of a batch where they graduate from the program. Uh, and then our ass is being at BlackRock city.
And so in that week, we’re like, okay, we need to raise the fund and deploy it and actually get into all of the 11 crypto companies in that batch, cuz the whole promise of what we’re going to do was an index. Right. So we’re just. We’re not gonna use our brain. We’re just gonna go get into all these companies, right?
Like no one trusts us to make investment decisions that we, they don’t know who we are. Let’s go deploy this capital. Um, and so we like have to call up every single one of those companies or, you know, get ’em on email and be like, “Hey, we are this YC alumni group. And we would like to invest.”
And if you’ve ever done kind of deployment of capital as an investor, returning money is a No-No, right? So you’re like I have 850 K to spend. And if I don’t get into all 11 companies, there’s gonna be money left over. That’s bad. Um, so we need to sell real hard.
Andrew: Basically get them to take your money, even though it’s small checks, they don’t know you and you are…
Ben: They don’t know us. Yeah. Yeah. We have no brand. We have no record. We are just like, Hey, we are just one of you. And I think you want money from more of you.
Andrew: Okay.
Ben: that was the
Andrew: We’re in it. We’re in this community. We understand it. We’re developers who can fix some kind of crazy problem. The way that we just
Ben: I’ve been in full time crypto for like four months.
Andrew: okay.
Ben: I own some Ethereum and some Bitcoins.
Andrew: All right. So they all take your money. Now you’ve got something let’s go into the DAO part. Where does the DAO come in now? You’re doing what.
Ben: Yeah, so we’re like, holy crap. We can’t believe we pulled it off. So in this, five day period, we did all this work , people want more of this. Um, and so Don, myself and Orion who’s, uh, a third partner in this endeavor were like, Hey, we should form a venture. we should actually raise real capital from, limited partners, like raise 10 million bucks and we can probably do it from our community as well as some outsiders. And we’ll actually become venture capitalists. And so we formed a VC firm, Orange fund. Okay.
Well, the fund by itself is not that interesting. Like in, in my neighborhood, I think if you throw a rock, you’ll hit six VCs. So like what’s another early stage crypto venture firm gonna stand out on. And I was like, you know, I’ve been working on this framework and an idea of how to form DAOs and I haven’t solved it, but I’m pretty sure I can get there. I think there’s a way to actually build a DAO that can support a venture fund.
And in exchange, we will give the DAO all of the upside from that venture fund. And this is like a revolutionary. like venture funds live and die by the carry that they generate, right? Carry is the 20% usually of the upside of any returns on that fund. So, you know, if a 10 million fund becomes a hundred million dollars in return, the general partners of that fund share in 20 million worth of profits.
And so what we’re saying was instead of taking all those profits and keeping it for ourselves, we would actually give it to the DAO.
Andrew: Okay.
Ben: Sounds crazy, huh?
Andrew: Are members of the DAO buying in also.
Ben: There are members of the DAO who are also investors in the fund, but the thing that we solved for was how do you become a member of the DAO? Participate in the DAO without actually being an investor, because then you could increase the network of people who can help you. You could actually give people a voice in the upside and, and in the DAO without having to put, put up
Andrew: so we’re looking at two different organizations. One is the venture fund that makes investments and has an upside, if those investments pay off. The other is a DAO that gets tokens, doesn’t make investments gets an upside, but the way they get these tokens, which are shares of the upside is by earning it.
And earning it how?
Ben: So there’s a little legal caveat in that tokens. Do not entitle you to the. At least there’s no, there’s no way to tie that yet. So what happens is you are you have these tokens and like CrisisDAO having these tokens means that you have a voice in how those funds get spent.
Andrew: Okay.
Ben: And so the thesis behind orange fund is that entrepreneurs generate a ton of value, but the vast majority of that goes back into the investor’s pockets. And what we really wanted to create was a venture system that actually put money back into the hands of the. And obviously you can do that very simply by returning the money to the entrepreneurs who actually helped you get there.
But what we wa really wanted was to create an effectively, an endowment that would help entrepreneurs.
Andrew: Okay. And the entrepreneurs are the members of the DAO. These are other Y Combinator founders who, if they get an upside, if they have some real interest and connection to the companies that the venture fund invests in, then they could contribute code introductions and so on and then get an upside for it.
And that’s the connection that you made.
Ben: Imagine that there is now a DAO with a treasury and it’s expected to receive millions of dollars from the venture fund, the Orange fund, the people who are members of the DAO obviously you wanna help the fund, right? Because if they help the fund realize more, gains more money flows into the, the treasury of the DAO.
So that works out great. Interests are aligned. The thesis there is that the DAO now has all this money that it can spend to help other entrepreneurs, whether it’s YC or not. It doesn’t really matter. Right. We believe in entrepreneurship, we want more people to actually build great companies and great products.
And so by having tokens by earning tokens, by helping. You have a say in how those funds are spent and reinvested.
Andrew: Okay. And so what are some ideas for how those funds could be reinvested?
Ben: Yeah. So we just launched by proposal. In other words, a member of the DAO showed up and said, I would like to propose that we create full-time fellowships for entrepreneurs. And so one of the things that we see is that there are ton of Web2 entrepreneurs who are moving in the Web3 and they need some time to actually get acquainted, just like I.
Uh, they need some sandbox time to actually learn about how web three works and what they want to do. And so what we’re doing is we’re giving them grants to spend three months full time exploring Web3. And if they form a company within a year of this program, then they will give us a small position of their company.
If they don’t great, no harm, no foul.
Andrew: The DAO though, doesn’t have any of this money until after there’s an exit and a profitable one. Right?
Ben: well, so we figured out a way, uh, to actually get more money in faster. We designed this DAO we moved the WhatsApp group to discord, uh, primarily because we actually hit the ceiling of the number of people you can have in a WhatsApp group. There was so much demand, we’re like, we need to move somewhere that we can actually have a deeper conversation.
And this was a natural choice, cuz it was very what three. . And so now we have hundreds of people in a Discord like, wow, that actually worked out pretty well. Like everybody migrated. Um, and so I proposed that we actually build a DAO and the DAO’s gonna work like this, blah, blah, blah. Um, and there was a way of actually validating, you know, that you are part of YC that actually got us.
That was a viral loop that I designed.
Andrew: What I gotta say that was, that was phenomenal. You created an NFT that cannot be passed to anyone else, people added to their wallet. And that’s how they show that they really are a Y Combinator alumni.
Ben: Actually I created something before that to get people in there. And that NFT project called Passport was a DAO member, grassroots development work, because they’re like, “Hey Ben, you’re doing this all manually. Why don’t we automate this for you?”
Andrew: And this is one of the examples of what excites you about a DAO that now you have people who have a shared interest and it’s not just, Hey, Ladi doll, let’s get together and help each other. It’s we have a real financial stake in each other’s success. Okay. What else?
Ben: We ended up with effectively 10 times the number of people that we kind of estimated. And so everything that I thought about had to actually run DAO, which was at like a hundred member scale, kind of broke. Like we have hundreds of applications for funding. We have 1300 members.
Um, and so it’s scaled really, really well. And all of a sudden we started drawing attention from outside parties. So a layer, one blockchain, like a grand or near wants more people to build on their platform. Right. Because they need an ecosystem of products. So they came to us and said, “Hey, we would like to actually get in front of your founders who are looking to build new companies and tell them about a grand and near, um, in exchange, we will give you millions of dollars.
Andrew: for nothing other than to get in front of the founders and support. So you had millions of dollars and they had
Ben: Yeah, so we, so we said, there’s a venture fund. It’ll give all of its profits to the DAO, if you help us. And so you can earn tokens and the DAO by doing so that drew a whole bunch of people, which drew more people. And so this snowballed into a large community, one of the largest communities of, um, experienced startup founders in the.
Andrew: okay.
Ben: Overnight. Right. And all of sudden they’re like, wow, that’s a good group of founders. Why don’t we get in front of them? And what is, what is gonna cost us to do that? And so now we have all these, all this to all, all these tokens from these layer ones coming in, and now we can actually fund programs like the
Andrew: You take their tokens, you convert it into, I guess, other cryptocurrency or Fiat use that to invest in the fellows that you are then backing. They get some time to learn about crypto. They create companies. They give you equity in the company. This comes into the DAO more upside for the DAO. All of this is something you had to create.
If I wanted to create a company today, I would just go to legal zoom and say, I need a company. They would create an LLC. They would mail me something that I would throw out and ignore. But essentially I would have an LLC with a structure. We all understand there’s no DAOn in a box company there was by then.
Why do, why do you need to create then?
Ben: there’s actually more than a, probably a dozen DAO a box C. And the thing that I, the, the insight that I had was nobody knows what a DAO is. Right. People have heard of it. I think they kind of get the concept that there’s tokens and voting and things like that. But, um, the vast majority of DAOs in the world, uh, then there are thousands of DAOs are just small groups of people like crisis DAO investing together, and it, that’s not really scalable.
And so if you wanted to build a mega network, if you wanted to truly harness the network of large numbers of people and do it legally. we actually, um, at origami have figured out a framework for that. And it’s been tested, right. We’ve not only done it at orange now, but we’ve now done it for other customers who share a similar framework.
Andrew: Okay. I’ve seen some of the companies. And so essentially what you said was look, here are all the things we had to invent for ourselves. We are now going to. Create a set of best practices, a set of software and a set of experts who are going to do this for other people. And what are some of the problems that you ran into?
Because DAOs existed long before you got in there with
Ben: Yeah, DAOs have existed in
Andrew: Okay.
Ben: And the problem was that there was no way to define membership qualifications or criteria. In other words, if somebody sold you a token, you could become a member of the DAO, uh, for orange DAO. That was a massive problem because we are not saying that you can be a member of the DAO just by holding a token.
You had to have actually some qualifications to become a.
Andrew: Okay.
Ben: but then if you wanna freely trade those tokens in the future and list them on the open market, you would lose control of your membership. And so we had to invent the idea of a private social network on chain, right? A DAO that actually had membership requirements yet had a liquid token that anybody could actually buy
Andrew: But they don’t get access to the discord and part of the membership and the voting, just because you have enough money to buy somebody else’s tokens doesn’t mean now you are smart enough to give input into what we should do with this money and which fellows we should back. That’s the thought.
Ben: yeah, the idea was the com communities are more than just economic groups. So how do you actually support that? Because we wanna meet people where they are. We’re not dogmatic about what crypto should be. We wanna make sure that crypto’s useful to as many people as possible. And so that meant actually supporting the way communities are actually defined and informed today.
Right. Which is, do you qualify? Do you need a qualification? Um, how do you actually vote? How do you participate?
Andrew: Okay. All right. You know what, a lot of what we come into DAOs and crypto with is, is the belief that come on. You’re just creating a set of bureaucracy to learn about the bureaucracy. That’s not necessary. Now we’re starting to see some things that are necessary, right? It’s not easy to figure out who belongs in the group or not.
It’s not easy. Once you get someone in the group to give them an upside that then they could go and turn into money that they could take to the grocery store or buy themselves a house or pay for their kids’ education and all that needs to be organized. And yes, you could create a bunch of contracts, but you’re saying, look, we have this framework that already exists on a platform that’s growing.
This is why we’re excited about DAOs and that’s origamis mission to do for other organizations, what you did for orange, the Y Combinator organization. And to be open every time I keep saying, you’re going to democratize it. You keep talking about how billion people will need to have DAOs you keep saying yes, but origami is not going to allow your mother Andrew to create her stock investment company with her friends.
We’re not here at that level. We have to play at the big level. and then what we learn and what we create as best practices will funnel itself, self down. And one day maybe your mom does have a fund with her neighbors where they invest in something and they use some of what we learn. That’s the vision.
Ben: So in this stage of the ecosystem development in this early, early, you know, first inning stage, we need successful examples of DAOs that are scalable communities that have thousands, tens of thousands of members, so that the idea and the principles of a DAO get up top adopted by more and more. right. We need shining examples.
And if you think about how value is distributed in a, you know, market, the top 1% will capture the vast majority of the value of that market. Right? And so from a business perspective at origami, we only are interested in investing in DAOs that we believe have the potential to become that top 1% of DAOs in the world, right.
There are DAOs that are. And I think there are lots of people who are gonna be using DAOs as a great way to actually coordinate their friends from and, and buy a bunch of, you know, JPEGs. But from an economic perspective, the cutting edge is in the number of people, the amount of wealth that is actually captured by the DAOs and created by the DAOs and supporting a very complex set of operations that DAOs can do to enter into many lines of business.
Andrew: I don’t know if I agree with that. Like, if you really want DAOs to hit a billion people and to be part of everyone’s lives, I don’t know that you really could predict it. It’s almost like saying we are only going to back entrepreneurs. This is like maybe 10, 20 years ago who came out of, uh, Harvard and Stanford and MIT.
You definitely get a lot of wins, but you’d miss those outsiders who. Who have ideas that you wouldn’t have expected? Why not create a framework? That’s just log in, write up what you need and then go with it.
Ben: Yeah. We’ve actually, as an industry, tried that for the last five years. And the data’s actually very clear that the vast majority of those who are doing self-service don’t actually get anywhere because the hard work of building a DAO, it’s not in the contract of the token. It’s how do you work with a community?
How do you incentivize them? How do you actually listen to them and actually allow their bottom up ideas to actually have value, and support them. And so tho those are very like soft skills. To be very clear, we don’t care about the school you went to. We don’t care about your background.
We care about your idea and your ambition. And this is very much the Y Combinator way, right? We never ask like what school you went to. We’re not here to actually just fund the previous network, over and over again. It’s the idea that if you are ambitious and you have problems because the current market solution and technology just doesn’t give you enough help, we are there.
Andrew: Got it. All right. So it’s not about letting my mom come in because she has a small investment pool and she’s not trying to be big. But if there’s someone who didn’t graduate from school, doesn’t really have much background at all, but has an ambitious idea. Then you say, okay, it’s gonna take us a lot of resources to get you up and running, but we will invest in it if you are going to work on a project that has the potential for a big upside, that’s the vision of, of Origami.
Ben: So, so here’s what we care about, right? We care about the fact that you have a community, right? Um, you need to have people who support you and believe in the same idea as you do to build a DAO. And so that is ingredient number one, uh, ingredient number two, that you actually have some ideas about how to generate revenue for the DAO.
In other words, that community is working towards control over some asset. And how will you build the value of that? Right. So in the case of, um, orange DAO, the venture fund was providing its upside into the treasury. That qualifies as the very first line of revenue that bootstrapped everything else.
Third does the founding group and team believe in DAOs and decentralization because we’ve had cases where people came, came to us and said, um, secretly, I want to have majority control. And I’m like, then why are you a DAO. right. That’s not philosophically. And also morally.
Andrew: or tokens that one day will be worth something. And it’s the equivalent of giving shares to shareholders. You’re you’re saying that’s not really how these things.
Ben: That’s not how this works. This really is about decentralization, about having people, giving people true voice in an organization and a community that they’re part of. We don’t mind that you get a larger share, but you can’t take control.
Andrew: Okay.
Ben: because what’s the point of a minority share if you’re gonna vote them down all the time.
Andrew: I see that people will know these coins are not really valuable. They’re smart enough to figure it out. Got it. Okay. I see, I see where you’re going with this. I don’t yet know fully where we’re going with this podcast. So what’s a good way for me to get feedback from the, from the audience about this, to see how helpful this is, how do I get this in front of more people who will then be poking me and telling me, Andrew, you did this wrong, or you should have done that.
Ben: Oh, my gosh. That’s a, that’s a great question. I don’t, I don’t, well, I have to think about that a little
Andrew: All right. I’m just gonna give people my email address here at the end. andrew@mixergy.com.
And I’d like to see what people think about these, this interview, this podcast and these conversations and what’s missing from DAOs what’s missing from what origami is doing. What’s missing from our understanding of where this is going. And I think maybe, um, One of the topics we’ll talk about is Ben, what’s your vision for the future of DAOs?
Where do you see them going? What would you ideally like to see happen in the world? And why? What are you building towards?
Ben: Yeah, so. I believe that if we want to build a fairer society, that you need to give people a voice and the ability to actually direct their future, it doesn’t happen overnight. And what we’re working with here is not a democracy democracy work at the political nation level. This is capitalism taking a step towards giving people more equitable. and I believe that by people participating in a system by contributing and earning returns, that we end up with a better society. And this is something that I’ve experienced, in the early days of cheeseburger, when we were accepting submissions from the public right. Crowdsourcing. And this is like crowdsourcing with absolutely massive potential for returns.
Andrew: It really is. All right. Thanks for doing this. and we’ll see you in the next one. Bye everyone.
