The Decentralized Autonomous (Agency) - Part I
DAOs envision a collective organization owned and managed by its members, with all of them having a voice.
For those that know me, I have been fascinated by the practical uses of Blockchain technology beyond cryptocurrency for some time. I was recently asked by a client to help them better understand Web3 opportunities for their business. While there are plentiful opportunities in digital content and services for both marketing services firms and their clients, I have been following the promise of a Decentralized Autonomous Organization and the potential impact on how marketing services organizations are structured and operate.
In this three-part series, I will explain:
1) What is a Decentralized Autonomous Organization (DAO)?
2) How does a DAO work and how do you start one?
3) How could DAOs reshape marketing services?
Part 1 - What is a Decentralized Autonomous Organization or DOA?
First, let’s briefly walk back through the various iterations of the Web to understand how we got to Web3:
Source: Nazhim Kalam
Web 1.0 according to Tim Berners-Lee is the “read-only web”. Users searched for information online and read it (or buy it). Shopping cart applications were an example of customers searching for product information and then purchasing.
Web 2.0 was the read-write era where users could create and contribute content and also interact with other users. The gig economy is an example of the evolution to Web 2.0 where users could contribute their time, their cars, and their homes to eCommerce.
Web 3.0, or Web3, is the point where basically humans need not be involved to govern systems and processes such as contracts or payments. Web3 technologies can run on blockchains that are trustless and permissionless without an intermediary.
Now, let’s get to DAOs. Wikipedia defines a DAO (Decentralized Autonomous Organization) as an organization represented by rules encoded as a transparent computer program, controlled by the organization members, and not influenced by a central government. As the rules are embedded into the code, no managers are needed, thus removing any bureaucracy or hierarchy hurdles. In more simple terms, it is a group chat or ‘ internet community with a shared bank account’ according to Cooper Turley, an investor and builder of several popular DAOs. They can be used to manage “projects'' which can be entire businesses or they can even be used to manage investments. They can act similar to limited liability companies (LLCs), VC firms or investment firms, like PleasrDAO.
DAOs are being used for many purposes, such as investment, charity, fundraising, borrowing or buying NFTs, all without intermediaries. So you can have a better idea, a DAO can accept donations from anyone around the world and the members can decide how to spend donations. Can you imagine being a co-owner of an artist’s song just by using cryptocurrency on an internet-based organization? In May 2021, Jenny DAO acquired its first NFT, an original song by Steve Aoki and 3LAU. This DAO is a metaverse organization that provides fractional ownership of NFTs. Its members will be able to oversee the purchase of the NFTs and Unicly protocol’s smart contracts control the vault where these NFTs will be added.
DAOs were designed to be decentralized with no centralized management committee. That fact tends to be where many depart from visualizing the potential for DAOs in traditional business functions. The concept of a figurehead or an executive team leading a company through good and bad times is hardwired in our perspective of how a company should run. We will explore how that mental block can be framed into an opportunity for changing how marketing services function and also a means to stimulate growth rates in the industry. Keep in mind that growth rates in marketing services have been in the single digits. While digital agencies have been a bright spot, you’re still only talking about low double-digit growth. The future is ripe to revolutionize how marketing services firms will staff, evolve, and operate their businesses.