The role of leadership– I am curious to find out if leadership changes in web3. With DAOs specifically, is leadership purely informal? Is there a collection of leaders of SubDAOs? In some ways I see the importance of a leader only increasing.
In web2 I believe a CEO has three responsibilities. I find that clarity helps both the CEO and the company be more effective. In web3, I think that evangelizing a vision and attracting and retaining talent may become even more important. But I think for many web3 organizations, and particularly DAOs, it likely won’t be a traditional CEO who accomplishes all those tasks. I really liked Maggie Hsu’s (and Alex Zhang’s) articulation of the role of leadership including the importance of creating frameworks for others in the community to build upon.
The free-rider problem in DAOs has implications for financial incentive structures. It may also have implications for non-monetary incentives, which is where leaders can have an impact (i.e. recruiting talent to join based on intrinsic motivation, not just extrinsic). It’s unclear to me whether the leader’s role will remain the same, or of equal importance, in terms of making sure the company doesn’t run out of money. It’s still relatively early though and as some have pointed out, there are very few entities that actually fit the true DAO definition today (frankly I agree the label is confusing for what exists).
From where I sit, there are some messier challenges for leaders in web3 than in web2. I was still CEO of a venture-backed startup for the first ~9 months of COVID. While our company was always ~30% remote, going to 100% on Zoom was difficult culturally. It’s hard to lead an all-hands, celebrate a product launch, welcome a teammate, or discuss losing a customer when everyone is on mute. Tooling and infrastructure will evolve and in a few years, Zoom-only meetings will look dated. But today it’s tricky. We could say this about all remote culture going forward, but I think it’s exacerbated in web3.
I recently talked with a web3 founder about an additional pain point I hadn’t previously considered. He has always had his actual name attached to the company (unlike some web3 founders who choose to use pseudonyms). The company has given tokens to users as they have decentralized over time (some of which have been sold in the open market). As those tokens have demonstrated volatility, he has received aggressive outreach from token holders, most of whom he doesn’t know. It might be akin to being a public company CEO who can’t control which investors hold the stock after the company goes public. Except in web3 there is unprecedented volatility and no IR department. New challenges. Satoshi Nakamoto was onto something by not making their identity known.
Geographic concentration seems to be a thing of the past. Blame COVID-19 or DAOs, but the days when 90% of tech companies had their headquarters in San Francisco are gone (thankfully). That creates opportunities (broader talent pool) and challenges (maintaining cultural cohesion behind a common vision and culture). But leaders will adapt. There are other cultural challenges. Free-riders abound in web3 — count me amongst them for most of the Discord servers I’m a part of. This seems to be getting solved through DAO engagement tools like bounties, but will take time.
Today, what worries me about web3?
I’m someone that is often turned off by hype. While I think we’re in a hype cycle for web3, not participating and understanding web3 feels a bit like having a crystal ball in 1998 and saying, “well, there is a downturn coming so I’m not going to learn about the Internet”. I believe some version of what we call web3 today is a major part of the future — and I’m excited about that prospect.
The environmental impact of web3, particularly Proof-of-work as a consensus mechanism, worries me, though many blockchains, including Ethereum, are moving to more energy-efficient consensus mechanisms like Proof-of-stake. I’m hopeful that most of web3 will evolve and get better. I’m worried about how few investors in web3 understand what they are investing into. There is a lot of blind faith that reminds me of 2000.
Transactions are (broadly speaking) slower on web3 because they are decentralized. The UX is brutal, as anyone who has used most DeFi protocols or tried to get the Macy’s Thanksgiving Day NFT (as I did) can attest. Gas Fees on Ethereum are ridiculous. Taxes and regulatory issues are murky at best and a thoughtful approach is needed now. The concept of cutting and pasting addresses in hexadecimal format is clunky and representative of where we are in the cycle.
Beyond the movement of money and DeFi more broadly, there are few real problems being solved by web3 today. As someone that built a fintech startup, I think facilitating the movement of money more efficiently matters for the world, but I also want to see more problems being solved. Tooling is needed, and that will facilitate the next wave of B2B and B2C web3 entrepreneurs. Best practices are needed. Practical applications that are unique from web2 are needed.
Web3 will not save the world. It will, however, change it. As Adam Davidson and others have pointed out, the innovations coming from web3 can be used for good or ill, just as cell phones, self-driving cars and social media can.
Today web3 feels a bit cultish. I’m more in the cult than not, but like our political environment, I deeply wish there were more people with a balanced and informed perspective. Regardless of the topic, I really like listening to those who are informed yet reach different conclusions. Those are the perspectives that force me to think more deeply and either change or strengthen my opinions. I appreciated how Moxie’s piece started with him *building* in the technology and then talked about some of his questions and concerns (it is a must read on web3 btw). It was devoid of emotion, other than perhaps hope, and I think we need more critical thinking like that.
As I think about what I want to help build in web3, today my mind continues to come up with mostly skeuomorphic ideas that look a bit like web2. I am reminded of the period just a few years ago when every startup jammed ML and AI into their pitch deck, regardless of understanding or whether the technology actually solved a real problem for customers. It seemed like a Frankenstein bolt stuck on the side of a proposal (I remember being pitched on a restaurant chain in San Francisco that claimed to use ML). I believe strongly in leveraging technology when it actually solves problems for users, but at this point in the hype cycle we are seeing a lot of companies launching with those Frankenstein bolts. I remind myself to focus on solving real-world problems, and not jamming web3 technology onto a product that doesn’t need it. I’m hopeful that I will begin to develop more web3-native ideas as I go further down the Rabbit Hole, roll up my sleeves and play with the technologies more — and I hope you’ll join me.