What Lessons DAOs Can Learn from Corporate Governance | Larry Sukernik, Derek Hsue

Transcript

before we jump into the app quick reminder that nothing on bell curve is financial advice everything is just a meme hope you guys enjoy a lot of times people people really like Founders really truly want to create these public goods and it's it's really important to them but they don't think through what happens when they have investors and token holders who actually have control over the public goods via this governance and economic right and I think that's where things go a little bit of Haywire [Music] all right buddy it's gonna be a good one today we're talking to uh Larry sucker Nick and Derek Shu from reverie really interesting uh so we had a really good

first episode with uh hasu and Chris on we talked all about uh they give us basically the high level idea of product governance fit or business governance fit as as Chris wrote that piece next we're kind of moving uh and talking more like tactically right about what some of this stuff actually means so um just some some background for folks uh Larry and and Derek run a firm called reverie they're probably one of the most kind of Hands-On like practitioner-focused groups that actually interfaces with daos on a daily basis so they're much more qualified honestly than than you and I in many regards to discuss like kind of one of the the pros and cons of how Dows are structured today and you know what their sort of recommended changes are going forward and we specifically talk about kind of map out

um you know what uh corporate governance kind of looks like today how it might be different in Dao land and then we get a little bit prescriptive and offer some advice for Dallas towards the end of the episode but um and you in there too your maker delegates in this intro you took the what are we talking about you took you took the who we talking to you talked you took the who did we just talk to in the last episode yeah you got the mix you and there you have delegate a baker yeah we heard some on the ground experience from YouTube I'm really bringing nothing to the table all right let's uh this is a really good episode I hope you guys enjoy it let's get into it all right guys uh welcome back to another episode of bell curve uh we've got Larry sucker

Nick and Derek Shu the co-founders at reverie fellas welcome to the show glad to be here thanks for having us on yeah guys really appreciate it um we've got a lot of ground to cover as you guys could probably tell from the uh Mega document slash novel that I sent over your way before before recording here uh but I'd love to uh kind of start high level here and get your guys thoughts on the state the current state of uh Dow governance um so maybe as a as a jumping off point uh Larry I've kind of heard you make this analogy of you know just just setting context here that that people kind of bring their past experience uh to them when they're looking at Dow governance so if you kind of come from a political background you look at this more through the lens of uh

you know poli-sci and how governments kind of work and if you come from more of a a builder kind of corporate America standpoint you kind of see elements of corporate governance that should be introduced to get daos so can you kind of address that idea of people you know bringing their uh their their work from home so to speak and like what is your mental modern mental model for thinking about Dell governance yeah happy to refund that a little bit I mean you know the the way I think about this stuff is there's all sorts of mental models for pretty much anything in life right whether it's governance Capital allocation um design you know people people when they're learning about New Concepts particularly complicated Concepts they tend to reason through analogy and so mental models are a very easy way to to

think about new complicated things and you know in my experience and in our reference experience with Dallas the two common mental models for governance in in Dao land are really one hey let's govern these things as countries right so whether it's a democracy sort of thing where um or dictatorship but that's like one mental model right and the second one is corporate uh governance right so having uh the same sort of mental models you apply to uh to companies right with uh shareholders with the board and with investors um and managers um that that sort of mental model applies as well and those I would say are the two common ones you see in Dow land there are others to be sure but I'd

say those are the most frequent ones and and they're basically just mental models right these are ways that people think about um how to make governance decisions in the crypto space um so probably just reasoning by analogy is almost always wrong but again they can provide kind of helpful balance points right or almost goal posts for how to think about things um so when you're when you're looking out there into the world of the daos that exist uh today um I mean how would you kind of make that distinction in between like governance for like a liberal democracy on like a government type scale versus Corporate governance like where is it uh what are sort of the principles of both and where does it make sense to apply those different principles it's a very difficult question to answer I think it's um the answer is it depends right

on the on the project um my general gutsense for this stuff and I've shared I've shared this before on our podcast I pledge agents is basically the government instructor should fit the product so if the product benefits from having um you know a a a very slow moving governance structure right so take like ethereum for example right ethereum pitches itself as a neutral base layer platform that's censorship resistant well if if that's the case then it probably benefits from having a very slow governance process that way developers can know if I'm building on ethereum the ground is not going to change under me right it's not just going to shift overnight but if the product is something like an app right

that benefits from Rapid iteration upgrading you know the product and then fixing bugs then the governance structure probably should look more like you know a company right or a dictatorship or you can make decisions very quickly and so you know having having some sense for what governance structure fits my product I think is really important to get it right Derek can I can I have you piggyback on on layers point there do you think that that is set from the beginning like you you when you set out to build something you're like all right this is a product Dao and and it because it's a product out should be governed like this or it's like okay in year one and two it you know it's a pro it's we're focused on like wide products so maybe it's like very centralized decision making then in year threes and three and four it

changes like how do you think about that uh the governance changing is like the maturation changes yeah great question I definitely think that governance structures evolve over time for projects just by by natural forces by Natural Evolution as there's more and more stakeholders like obviously the decision-making process and and the debates they change and I think that's how it should be I think early on pre-product Market fit you probably don't need lots of voices in the room contributing to every single decision so again it happy to go into more specifics but I think broadly speaking like depending on the life cycle of of the

projects the same governance structure can make a lot of sense or or make no sense at all so hmm I think maybe there are a couple of different like if you almost had like a two by two Matrix of different uh like some of the two of the important factors are like maturity right so is this a six-month-old uh startup right or is this a you know 10 year old type Corporation nothing really isn't encryptos 10 years old outside of Bitcoin uh but there's kind of like the timing and maturation on one axis and then there's also close uh closeness to base layer infrastructure on the other so maybe you would put Bitcoin and ethereum is extremely close uh like almost like the bottom layer of infrastructure which is depending on how you conceptualize those two projects

kind of like a store value money type thing and then like an IP uh preservation type system on on the other side of things and then you can kind of layer up from there um so maybe like one layer up from Bitcoin ethereum you might put like a maker uh right type type protocol um I'd be curious if you guys like one thing that has come out of our interview with uh hasso and Chris uh you know previously was different governance structures are appropriate for uh based on where the protocol sits on infrastructure layer so I'd love to get your thoughts on if you agree with that concept and if so if you've given any thought to like categorizing you know what are the different layers of financial infrastructure that we're kind of building here I think the intuition there is is quite sound right the the

intuition being if if it's lower level infrastructure it probably is being built upon by other developers right by other people in the ecosystem and if that is the case then they probably don't want that infrastructure to change very quickly because if it does right it's it's going to Bubble Up all the way to the top and that's not good and so the intuition is hey if a lot of people are building on this infrastructure it probably should have a very slow moving governance structure so that people can actually depend on it and they won't wake up one morning and the whole thing is different right and the higher level we go the fewer people depend on it and there's fewer dependencies right we can probably make more rapid iterations on

the government instructor so I totally agree with that without approach how about if I could like poke you to maybe I don't know if you've thought of this or I'll just put you on the spot here a little bit but if you thought about what those layers kind of might look like like maybe as a jumping off point right do you agree that kind of maker and maybe like a uniswap or or Ave compound kind of sit on that that first layer and if so like how many different layers are appropriate like hasu actually made made the point that the analog in corporations might be something like utility companies right which you have like corporate governance for utilities but they all keep they're almost like kind of semi-nationalized right there's there's an appropriate profit that utilities companies can make every year say hey we want to invest in

x amount of capex at this corporate profit because those are like natural monopoly type companies but they're regulated and their governance looks pretty different because we all need power right the government has basically said we want all of our citizens to have power so if you kind of um you know thought about those sorts of classifications or analogs uh in crypto specifically I struggle with this because in any given year I feel like well first about to take us to back all this stuff all the layers are very emergent right and so you know if we look at what we thought are the layers two years ago um a lot of those layers kind of you know moved around some when up the stack some went down the stack some stayed in the stack and some just disappeared right and so that layer cake it's very I

think difficult in any given time to say okay here's how it will actually cement and grow over the coming years um so my personal approach is just to look and see and not to overthink it and uh and not to have strong opinions on which layers are here to stay and which layers are are actually going to go away how do you guys think about the tension sometimes in between like let's look at maker as let's let's caveat and say it looks like a very base layer protocol today maybe we don't know exactly where it falls in the stack but uh you know maker is supposed to produce a stable coin die right that's the product and it has a you know on the one hand you you'd maybe want to minimize the the surface layer the surface level area for

governance right because it's supposed to do a very simple thing on the other hand you know the the competitive Advantage is kind of managing a balance sheet and managing risk which is actually a very complicated thing to do so how do you think about that kind of tension in between minimizing governance surface area versus actually the value add of a protocol like like maker is doing something very complex beneath the surface yeah happy to jump in I think again I think you highlighted both ends of the spectrum really well like on the one hand it's obvious that make her doubt if it wants to survive long term it has to be resilient to attack and governance can be a liability I think they're the more quickly something changes obviously

the more potential downside risk there is but at the same time yeah if you like maker Dow has they're where they are because they were one of the first projects to to launch in terms of ethereum and D5 so they were well positioned from the beginning but I think going forward if they want to maintain their positioning um yeah they're not going to do it by simply just surviving I think that's probably the most important thing but there still is innovation that that remains there's remaining yeah balance treatment management that has to be optimized and

over a long enough time frame if you only care about survival like you'll fall behind on some of these other parameters right like maker Dow is still only at this point five years old which is a long time in crypto but in the grand scheme of things pretty young right so I think yeah crypto gives us all a a a different sense of timing and and longevity but I think it's really important to just keep that in context yeah I've had a you know kind of similar thought and I I think sometimes where this this debate centers around for me is almost this idea of public goods so one idea that you kind of hear sometimes even within the the scaling road map of something

like uniswap and leaving aside the regulatory component and lens through which you can look at this which I want to get your take on later is this idea that okay um so uniswap V3 is basically we're going to stop really building much post that right that's kind of a public good that we want at the base layer there this liquidity provision kind of decks that other people can build on um and then we can build products and services on top of that but if you if you dig into the Assumption there it's this idea that unit swap V3 is the last layer right and for whatever reason we've decided you know there was V1 and now there's V2 and V3 is basically good and that's going to be the public good whereas you could take another angle and say well actually you know providing liquidity and creating uh you know

stealing market share on the Dex level is still a wildly profitable business right there's probably good Capital allocation decisions to be made at that layer why have we surrendered building at that layer seems very unlikely to me that in two years right we've built the best Decks that we possibly can um so can you talk about a little bit how you think about this idea of you know public goods and where that enters the conversation as well I I think like in most cases if the thing has a token it's not really a public good right like all of a sudden you have token holders or the owners of the thing right if there's a governance uh right that the token holders have they probably have you know control over certain critical parameters and uh and they're going to

want to whether they tell you or not they're going to want to extract rents right and and I think that's not applicable to all projects certainly but to the Grand majority and um you know the public good stuff my sense is is um you know a lot of times people people really like Founders really truly want to create these public goods and it's it's really important to them but they don't think through what happens when they have investors and token holders who actually have control over the public goods via this governance and economic right and I think that's where things go a little bit Haywire Larry how do you think about or or to Derek how do you think about just who you're optimizing for right because Mike brought a public goods you're like yeah well when you have a token like it's not

really a public good because they have these token holders and it reminded me of that piece that you guys wrote musings on governance um where you're just talking about how there's a bunch of different like there's there are a bunch of things that you're trying to optimize for and sometimes you see people trying to optimize maybe too much for like the community or for like open Dows but really what you should be optimizing for is like building amazing products and shareholder value right which looks a lot like what we optimize for in corporate governance so I'm just I'd love to get both of your takes here like what do you how do you think about what you're actually trying to optimize for and and have you seen examples of folks optimizing for the wrong thing yeah I think like everyone has their own opinions on

token holders matter users matter Community matters like all the stake all stakeholders matter there's a lot of disagreement on who's most important and in what order and what and what percentage is but the one belief I do have is and I think on that on that point like what's most important like you could talk all day about that and we wouldn't get anywhere but I think what will be true for again a long enough time frame is the protocols that care about the right one or two stakeholders over the rest they'll be the ones to actually survive and maintain their relevancy so it's not about what what what we should

care about it's about what will happen and and what the protocols prioritize so to me again it comes down to to users I think if if users don't remain on your platform regardless of what you use Community doesn't matter token holders don't matter Partnerships don't matter like none of that matters I think yeah if if users are there the other things will generally follow um obviously there's exceptions and and and it changes like depending on the life cycle but I think by and large like if you don't have users you don't really have anything how do you think about you know one of the Innovations of crypto that a lot of people tout as being one of the big benefits is

like alignment between token holders and users right so like web3 Uber or something right you know Uber on the blockchain you would have uh users the users of uber and and the early token and the early shareholders of uber might be one in the same right and a lot of people spouses as being one of the best things about crypto maybe in the in on the other side of the of the bull market you're seeing that this isn't maybe necessarily the case oftentimes I'm just curious maybe I don't know who to ask this question to but how do you think about just this uh dichotomy between like users and token holders and the overlap and Derek you're I agree with you you're optimizing for the user but like how how much of the overlap is there for the token holders as well I think

I mean yeah I mean I think as long as token holders are the only ones with like clearly defined governance power it will be an uphill battle for users to have influence on the protocol like but I do think users have a lot of influence even in protocols where it's like on-train governance and only token holders have a say but I do think over a long enough time frame yeah it's important for really important for users to have like a direct say whether it's formal or or informal I think Lido's SD dual governance is a great example of this where

ldo token holders have a currently have a lot of power and over again if lato continues growing there's a lot of downside risk for for users and etholders that are using lighter to stick so I do think over again over time we protocols should strongly consider implementing safeguards onto what token holders can do and the types of veto rights that that that your users can can have today most of that we know right is informal um but I think yeah it's it's an experiment I think worth worth running is giving

you the your average user more formal rights and and methods in governance just to jump on what Derek said because I agree with it um I mean you know you look at like some of the companies we grew up with right like uber and maybe seamless and um and GrubHub right and I remember when they first got started I was like wow this product is awesome it's super cheap way cheaper than the status quo right or like a taxi or like a delivery that a restaurant would have um but that's totally changed as these companies actually became incumbents right and I find you know Ubers are very expensive now probably more than taxis are at least in in New York where I live

um and the same with you know uh delivery for food and so I think there's this like General pattern that happens you know up and coming companies they're like we fight for the user right once they gain the user they're like well you got to make money right why did we do this fight for the user thing if we didn't make any money sort of thing right so they start becoming extractive I don't think that's necessarily a bad thing right I think that's just kind of a feature of capitalism right there's always this um you know uh chaos right in the system um and it really leads to Innovation because the incentive is always to fight for the user for the first five to ten years then once you have the user you start trying to make money um and I think we'll probably see a very

similar Dynamic with crypto companies that basically say hey we're not going to be extractive you know let's let's hold them to that to the fire five ten years from now and see what actually happens I have a maybe just because my brain sort of works uh like a five-year-old's uh I'd love to maybe like try to simplify and get a almost like a mental map uh for what we're talking about here which is when I think about corporate governance right and we're talking about different stakeholders here uh there are kind of three maybe four really that matter right there are the shareholders those the principles of the company there are the managers or The Operators and those are the agents and they're supposed to be acting on behalf of the principals the shareholders and then there's a a board of directors right which is they act as fiduciaries to the

shareholders and they're supposed to sort of be in between right and and watch the the managers and operators on behalf of the the shareholders I suppose you could also use add users right uh that that as a stakeholder but they don't they basically get no voice in corporate governance so I'm not really going to include them I would love for you guys who do you think the most important stakeholders are in our kind of crypto Dao land right if you kind of map out in the same way for corporate governance how it looks today uh in Dallas so like most important stakeholders go like each stakeholder and like relatively what their role is and what they do I'll take a stab at this I think if you empirically look at the evidence

today token holders have the majority of power and are the most active ones actually participating in governance in terms of proposing proposals voting on them like even chiming in right like by definition they are the ones they are the only ones that have formal power so I think they have token holders have the most influence today a lot of the time you need you need a pretty large minimum to even propose a vote which Gates others from from from really participating I think yeah users are the second category and generally against this is a pretty broad

generalization but but I don't see your average user that doesn't hold tokens like I don't see see their incentive to really participate in governance if they have a problem with the the product or the app they'll be in the Discord or the telegram like asking that question not necessarily participating in your on-train governance forum so I think yeah there's there's others obviously there's team members there's builders on top of the protocols that I think obviously are are are all highly relevant and and do a lot um but yeah I would that that's sort of my general thinking

my sense is um it it depends on just like it depends on in in the web 2 world the company um we're talking about I think here it depends on the project we're talking about too but I think the general mental model I have for this is um if the switching costs are are very high right then the token holders have um have a lot more leverage over the users if the switching costs are low you know users have way more leverage because they could vote with their feet they're not happy with the product they think it's extractive they're like screw it we're gonna go use another product right which is why Monopoly is Right typically have really high switching costs which is why they're very regulated right because you know government governments know monopolies

could just you know extract rents and users can't really vote with their feet so that's how I generally think of it and obviously companies in the in the traditional world that have higher switching costs they're valued way higher by markets than companies with very low switching costs because you know users turn much more quickly and companies don't have the ability to increase prices is as much as a company that has really high switching costs for their products I'd be curious like one one stakeholder that we haven't really talked about and maybe this isn't a formal enough group uh or it's still in its kind of nice and stages but uh one is kind of delegates um and uh I'd love to also start talking about some of the proposed uh sort of structures that Dao's have have advocated for that look a little bit

more like corporate governance uh you know hasu kind of talked about in our first episode what he proposed at maker I know you guys have proposed uh something a pretty interesting structure at at Orca so I'd love to get into some of those examples but I would love to get your understanding of what you know because right now in in maker and I'm talking Jason I know you're you're a bigger delegates maybe I get your opinion here to weigh in on this but um you know I think delegates are are being asked to increasingly weigh in on a an enormous quantity of issues uh and an increasing complexity of issues as well and historically there haven't been great compensation structures so you're starting to hear almost the advocating for like a professional class of delegates where it's almost like a

full-time role with compensation to weigh in on these sorts of things I'd be curious to get an understanding from you guys of like what the role uh what role delegates play in some of these larger dabs I can I can take a stab at this one first um I I mean you're right like there's this trend happening right where delegates are um are really being charged with a lot of the decision making right because people delegate their votes to them right because most people don't have the time or interest in browsing governance forums like it's very time consuming to get the information to know how to vote and so they're basically Outsourcing that to delegates whose job it is to read what's happening on the forums get a sense for what decisions are being

made and how to vote um for those decisions um my general Sense on this is like we we could have a world where you know we're going to have these professional delegates just like we have you know proxy advisors essentially right but that would be a shame I think there is no better um person situated to vote than the actual owner right the person who actually owns the assets right because it's their money right um the moment you introduce principal agent problems right where you delegate your power your governance power to someone who's um uh who's not going to face the risk of loss you know you will have all sorts of fuzzy decision making um that you've seen in the traditional

world too so I think that is probably the path of least resistance but I don't know if it'll necessarily lead to the best decision making I I have a thought on this as well but I'll answer my own kind of questioning because I've had before uh block works I was a consultant right so sort of very professional services and I I can tell you I the way I thought about solving problems as a consultant is extremely different about how I think about solving problems as an operator of a business and let me caveat this by saying I know reverie is uh you know I want to give you guys a chance to talk about it at the end but I when I'm talking about Professional Services I'm not really referring to you guys because you're a much more practitioner and like have stake in the game and think about

getting in the weeds but when I started being a consultant I thought you were going to solve really hard problems because that's what it's billed as right like the most challenging uh problems in business you get to go solve a whole bunch of them and to some degree that's to some degree it's not necessarily true uh in a lot of cases you're brought in kind of as insurance uh by your stakeholder right so like uh VP of marketing wants a or sales or operations who wants a big change done they want to bring in Consultants to basically you know look at the data but make sure the data says what what I say right so that I can go to the board and say hey I got these independent guys to come this decision but even more so than that is a as an independent party I didn't really

think about a lot I thought more about what would sound good or what would be a good Narrative of what would look good on slides versus what I actually thought would work and and it's just a very different maybe if you've had experience acting as a consultant versus like a proprietor and owner like maybe other people have had this experience so I hear these arguments about a professional class of delegates and I get it you have to be compensated and but at the same time it just doesn't make a lot of sense to me because you're sort of acting a professional class of delegates to make decisions for which I I just it just doesn't I don't love it I'll be honest it's by the end of that take there but um I'm curious if anyone

has thoughts on on that perspective I mean who would you have who do you have like make that how would you set it up differently would you take away the delegate system Mike or how would you I I guess the uh it's it's about properly uh incentivizing people who are who are best uh who are best suited to make the decision um so right now I think one of the big problems is this like one-to-one voting uh based on based on your token ownership that that kind of exists I just don't see that I don't see how that can continue and good decisions can be made especially in these early stage protocols um I mean yeah it reminds me of something that I uh the the I'll I keep going back

to this piece because I really liked it that reverie wrote the music musings of governance um there was one piece it was like we'd much rather participate in a dow with 10 motivated 10 owners then a Dow at 10 000 lackadaisical 0.01 owners right the outcome in the former case is likely to be far more positive than the outcome in the latter case um and so like in this it's a related idea right because in I think what you see right now is Dao's really pushing to a get as many people contr as many contributors as possible and then what you get is another thing that was talked about in the piece which is there's a bunch of conflicting interests and then B you get as many contributors and then they're like I don't want to actually vote I'm going to delegate my vote and then you just get

these like this cohort of like these delegates who they actually aren't really experts on what's going on in the protocol oftentimes they're just these like big brands in the space um and then you just start looking almost like I I've noticed that diligence on on votes in protocols is very similar to VC diligence where you'll be like and these and like how VCS have a lot of VCS do due diligence is like an angel investors why like why doesn't Angel invest in Deal they're like oh because like these funds are involved okay well why is the fund involved oh because andreessen's leading it and Andreessen has four billion and they must have done this great due diligence and that's how a lot of VC due diligence happens is like there's a remarkable

lack of due diligence well in like maker Dao how oftentimes it happens is like oh like this thing looks super complicated like I could spend 20 hours digging into this or I could see that like Mika honka solo and like Flipside voted on yes on this and like they're really smart so I'll probably go with them that there's a lot of overlap there yeah I mean I think that's kind of just like like I I agree with our with most your points but that's also just kind of how life works right like if I need a babysitter right I'm gonna I'm gonna if I have a friend that I that I trust that has great experience like I'm not gonna go through all the diligence myself as if I've met this person

completely new if I same thing so so I think but but I do agree with your broader point that it's like uber just raised a series a and we have external proxies debating on the forums about like what colors all the tax taxis have to be or or whether they can have like certain thresholds for for kind of cars like you don't need all of those people to be paid or or even to have that be a debate in the first place um so I think again it brings us back to this point of governance liability and and and the scope of governance which we've I know has been discussed a lot but yeah I tend

to agree like introducing too many professional delegates that have a very large scope it doesn't feel proper to me either that said I do think even with the protocols today like it can be helpful to have external voices that aren't just your community or or the team because the reality is that a lot of big token holders don't participate so if they don't participate the alternative is what looks like what is the alternative the alternative is either silence or someone less qualified or or less knowledgeable comes into fill out

void so there's no Perfect Solutions I don't think like a fully full-time professional set of delegates is is an Ideal World or or should happen but I do think like there's a lot of very obvious things that that could be done by by the people that follow the protocol here here's my I think my main problem with the um I'm doing what I actually hate when others do is just bring a bunch of problems and no Solutions but uh uh one of the issues with the delegate system in my mind is that there's minimal accountability for decisions um so so like let's say cow decisions are made internally at companies is um you know like like block works for

example like if we have a uh I don't know like a Chief Revenue officer or something and like they have a convict they have a convicted view on like where we should take our the sales side of our business and we're going to let them do it because they're the chief Revenue officer and like they're making a bold bet but if they fail like they could get fired right and like that's on that like but the high risk High reward in uh in in with these delegates it's like there's minimal downside actually and there's like a low level of accountability I would say um so again I don't have the solution but it does feel like um you me maybe that's the benefit of having these like committee like systems where you have leaders the leaders are accountable the leaders can get removed

from their places which again sounds very much like teams and VP of marketing and a VP of sales inside of companies but that's why I like this committee system is not because it's more efficient but actually because you end up with leaders who are incredibly accountable that you can actually remove when things go poorly I think that's that's super important right like if you have any sort of committee right like that's necessary but not sufficient like you actually need the committee members to hold the people accountable right and um and similarly like the idea was with a lot of the the V1 dials hey token holders will keep people accountable I think the reality though is most local holders are not equipped to people keep people

accountable and and two is accountability is um it's tough right because this is a cottage industry right so everyone knows everyone through one or two mutual connections and if you are in a committee or if you're a large token holder and you're trying to keep someone accountable and they're not doing good work you basically have to cross them and say hey I'm going to publicly out you and if you have a social relationship with this person or or entity it becomes awkward right it's just very very awkward um and I think there's like a lot of research that basically says you know accountability it either works when a all the individuals they really give a right like it's really important to them personally to be accountable or B when you have the the people who are holding the people

accountable they're Outsiders not not just independent folks but Outsiders who actually want to do the right thing right and to keep people accountable um so it's a really really tough problem and companies I think have the same sort of issues and there's all sorts of academic research on it um and I I doubt that will as an industry be the first ones to solve that all right everyone brief break in the show here to talk about our newest sponsor Reserve so you know it's looking pretty bleak out there it's not looking that great we know the one thing there's no bear marketing stable coins Stables babies Stables we love those stable Coins app which is why we're excited to partner with Reserve protocol so let's just start with the basics what is reserve it's a self-service platform to build deploy and govern asset-backed

stable coins uh which can be integrated with defy or within the real economy so the cool thing about serve is basically anyone out there permissionlessly can take any set of erc20 tokens and use them to collateralize their own stable coin so the long-term goal of the reserve protocol is to create a non-inflationary currency that is stable on a month-to-month basis but also a century to Century basis in the meantime though their open sourcing design decisions for stable coins which is just super super cool I think one of the benefits that you get there is diversification you hear it all the time in finance 101 no such thing as a free lunch except for diversification that's what you're getting with Reserve protocol yeah I've known the team for a long time I spoke on a panel at SF blockchain week with Nevin with Joe

Carlson and Alex gladstein really impressive uh growth that they've been able to have so far right the premier stable coin is RSV it is backed by three other Stables it's already used by over half a million people transacting over 300 million dollars a month right now like Mike was talking about anyone can go create a custom bespoke stable coin using the reserve protocol you can back it by maybe specific us SD Staples or you can get creative and you know maybe build something more complex like inversely correlated assets The Branding governance and composition are completely up to you and lastly if there are any Builders who are listening and you aren't interested in issuing your own stable coin what you can do is you can stake reserves governance token against your favorite stable strategies

so what you're doing there is you're providing backstop Insurance to stable coin holders not riskless right not Financial advice there's definitely some risk in doing that but it does allow you to earn yield especially now in crypto when there are so few ways to do that it's definitely worth checking out so at the very least you should click the link at the bottom of this episode go check out the reserve website see all the cool stuff they're up to most importantly though click this link gotta give Jason me some credit here all right now back to the show let's get into it I wanna um so a friend of mine pointed this out to me recently and I thought it was it was pretty interesting um there's a if you if you look up the definition of sabotage as defined by the OSS manual I want to give you a couple

of tactics for sabotage that's actually employed by the CIA and you you tell me if this reminds you of anything when possible refer all matters to committees for a further study and consideration attempt to make the committees as large large as possible never fewer than five bring up irrelevant issues as frequently as possible haggle over precise wordings of communications minutes resolutions in making work assignments always assign unimportant Jobs first assign important jobs to inefficient workers with poor machines to lower morale and with a production be pleasant to inefficient workers give them undeserved promotions discriminate against efficient workers complain unjustly about their work hold meetings when there is more critical work to be done there's a longer list but it is remarkable to me how uh the

definition of sabotage as defined basically by the CIA lines up with many people's personal experience with Dow governance so I you know I'd love to get your your kind of take on that you guys is getting your hands dirty working with a lot of uh Dows and you guys worked with phenomenal organizations I'll say but you know in in my opinion one of the things that you're trying to optimize for at a high level of a company is good decision making um it's been said in in other podcasts on this podcast before uh that actually there there's a big element of like regulatory Arbitrage that is trying to be optimized for especially in early stage Davos so I'd love to get your both of your opinions on this I mean how efficient are like

what are we really trying to optimize for here is it decision making is a regulatory Arbitrage is some middle ground in between and how do we start making better decisions in these in these organizations yeah I'll get to the second question but on the first one yeah that's one of my favorites memes tweets about doubt governance that I've seen and I've seen a lot I actually bought the field manual on amp on like the the book itself and flipped to that exact page and I like taped it up to the wall as a reminder I think to myself really about

just like making sure that that you care about the right things and this isn't to say that certain voices don't matter or certain opinions don't matter but I think when you're like when you have hundreds or thousands of people chiming in on certain things if you're really listening and and taking like being influenced by every single one of those you're not gonna do anything and this applies to not just it applies to everything right so I think it's important to like be aware of of of the different perspectives but yeah like getting to to to to to close and too personal invested and and listening to like

all these things like it's just not useful so I think yeah I mean in terms of your second question like how do we actually arrive at better decision making I think it again comes back to the common theme of having the people that are have the most context and the right incentives actually be the ones driving decision making generally speaking for crypto product calls today that are young that's going to be the team as they continue to grow I think that's when others with different specialized skill sets can come into the fold and and provide specific value I think

you again generally at this point don't need the masses and and thousands or tens of thousands of people chiming in and having that is is usually more uh of a of a downside than a pro at this point Larry any thoughts any thoughts there I I totally agree I think some people would argue hey if we have a bunch of people sitting at the table we're going to get to the wisdom of the crowds right we're going to have the crowd make a collective decision and it's going to be great I can count on one hand out of thousands decisions we've seen how many times that has happened it usually becomes too many cooks in the kitchen right which is the inverse of of a wisdom of the crowds and that's a huge problem

the the other thing is it's not even just wisdom of the crowds like time is a fact is like probably the most important factor right like we don't have endless amounts of time to decide on a single decision Taos and and protocols and and apps that can arrive at the decision quicker will again over a long enough time frame when even if that is a worse decision maybe than than one that takes like months to arrive at so I think iteration and and Rapid decision making is really important yeah

I have a um you know I want to start talking about we Jason and I have annotated this multiple times throughout this season uh this was one of the hardest topics that we've dug into to find people saying positive things about basically you know we do research before going to these seasons and it's been basic it was very easy to find people pointing out the problems uh with the current status quo but it's harder to find uh people who are willing to prescribe Solutions probably because you know I think you could imagine and I want to get into this piece that vitalik wrote about some of the advantages to Dallas and where a dial might differ from a corporation in its ultimate objective and why a more decentralized maybe surface minimized approach to governance could make sense but I think Bridging the Gap from point A to point B

is very unclear and I'd love to maybe highlight some of the models right the early attempts that we've uh you know that we've taken at bridging that Gap so maybe you could talk a little bit about the council structure that reverie proposed at at Orca and how that might solve some of these challenges yeah I'd be happy to chat through that and you know none of it is is really all that complicated or rocket science but some some context is Orcas and amm on Solana one of the top um MMS on there and you know we were we were basically trying to brainstorm with the team hey how do we create the most effective product for users to Derek's point I think the number one thing we think

about is product right because without that you're kind of screwed and we we're also thinking about how do we avoid some of the pitfalls other Dows have fallen into and in particular how do we make sure that they're able to iterate and move quickly right because to Derek's point in uh early stage company the most important thing is product and quick iteration times and and just speed and speed to Market and so what we basically created is a little bit of a hybrid between you know a typical corporate governance structure and maybe a direct democracy which a lot of the Dows are and the idea is basically the token holders elect the council and the council can then have

some Powers right like make new proposals right um have have access to the treasury stuff like that but at all times token holders have ultimate control so that if the council is acting Rogue or if token holders disagree with how the council is actually proceeding they will have a veto right and so there's always that's Fail-Safe at the end of the day such that if council is not doing something well the token holders can have ultimate say that's the high level summary of the the structure it's it's not that complicated uh we think it's not a perfect structure by any means but it's probably better than the status quo and really we're trying to optimize for is speed um and having the best product in the market

um and I think that's that's what we've come up with uh for for Orca and I'm curious how has the response been I guess both within Orca but also within maybe some of the circles that you travel within other communities do you get the sense that Dao's uh writ large are looking at Council structures as I I know it's run into some headwinds and maker but uh you know like council-like structures that either make a orca and or Dao is saying hey this is like actually pretty interesting and maybe as a contributor to Adele I'm been extremely frustrated by how hamstrung it is to make decisions at this organization or do you sort of run into I don't want to say I ideologues some mix of ideologues or entrenched incumbents who might have different

interests or a different ideology for how a Dao might look like what is the response been and orca's been really good um I think that the token holder and the just the community there in general is and I would say in general the Solana Community is much more hey let's move quickly and break things sort of mindset rather than the ethereum community which is much more ideological about decentralization and these are just trade-offs right like we personally at rivalry don't have strong opinions on which which uh communities better or worse but they're certainly trade-offs so Orca there's really not been too much pushback but I think a lot of the pushback at other projects we've seen which is fair by the way is hey the these committees that are being formed

are these councils right they're not putting in the right people they're putting in the people who are there to you know basically profiteer for their own benefit right and I think that's where the big pushback is is fine we're totally on board with moving quickly and iterating on product but we don't think you chose the right people these people are paying themselves too much and and doing no work right and I think that's a very valid criticism so it really just comes down to are the people who have power are they good people do they give a right are they aligned over the long term are they just making very short-term decisions and that's really hard to suss out I have a uh I'd like to sort of transition here just just moving through our list of topic is into kind of what you view as being the

ultimate value proposition for Dows uh maybe how and contrast that with how you know the corporate model for governance because trying to get at kind of an end game of why we are embarking on this great experiment in governance right and is there a purpose um is there is it basically is governance say you know Derek I heard you use this phrase I know hasu has used this phrase in the past governance is a liability right and to some extent if I were at reverie and I were in if I were uh you know interacting with some of these communities on a day-to-day basis I might have a very similar perspective but I'm trying to think like there's a reason why we're doing this right um if we were just trying to replicate exactly corporate governance then then what are

we all doing here uh so maybe on the spectrum of you know all the way on the left over here we've got uh governance is a liability because I have to run everything through this this crazy decision-making process that just hampers good decision making and then maybe in the middle of the spectrum it's it's kind of neutral right there there are some pros to it and there are some cons uh that they ultimately kind of balance out and then all the way on the right side of the spectrum is ultimately maybe not for every product but in in some very specific cases for a certain type of product either based on maturity or where it sits on the infrastructure layer this this very decentralized uh you know structure of governance is actually quite beneficial and uh government ceases to become a liability

and it becomes an asset I'd love to get your sense end game wise where you think governance ultimately ends up falling on that Spectrum I think in the long run the ideal governance platform is the one that lets the best ideas when and again I think that's that's a little vague it's a little it's like if you dig into what does that actually mean and I think it comes back to a question earlier you said which is like okay what are the actual strengths of dows like what are some of the positive attributes they have how can they actually compete versus other organizations and to me I the the big one is openness

right openness in the sense that anyone can join Adele whether it's what that means it doesn't I don't know like it depends but anyone can try to voice their opinion and contribute and I think today it's very hard for like an average person with no context to to join a doubt like uniswap and have influence but it is still nonetheless possible and we have seen anons with no backgrounds no names no no Prestige like come into large protocols and have a lot of influence be just because they have good ideas so to me I think the the the key over the

long run is making sure that the right ideas are surfaced and empowered while yeah minimizing the amount of bloat bureaucracy and and debate and and I think it's inevitable like some degree of that but I think it's again I think in an end state of doubts it's much better for like ideas across the world to be surfaced and used than with a a closed company that doesn't do anything transparently or in public so I think we're very far from that reality today but I think that is sort of the end goal

I'd be curious let me I'd love to um you know vitalik laid something pretty interesting out in this piece that he wrote and he expressly responded to this idea that Dows are not corporations it's title of the piece dolls are not corporations um and he basically laid out uh three distinct advantages to daos which is decentralized decision making in concave environments decentralization for censorship resistance and decentralization for credible new Talent neutrality um I do Wonder so we're talking largely about decision making in the context of early stage startups where you want really fast decision making because honestly in basically every startup

there are multiple bet the kitchen sink moments uh that Founders need to make and those are almost by definition unpopular decisions and difficult ones to make and those as vitalik defines them are convex decisions right it's basically a coin flip either it works or not and the benefit of the thing working vastly outstrips the uh you know it failing and basically every company has to make that in the early stages I think using his framework it actually I think Con in within organizations decisions largely start out as you want to be optimizing for convex outcomes which is binary bet the farm type things but over a certain period of time you want them to look more concave because

it's basically kind of a probability thing right if you Loca centralize the the decision making the power with one entity if they are able to keep doing coin flips right to bet the company odds are eventually they will fail and you're kind of seeing this in meta right now this is playing out in corporate governance actually much more interestingly even than what's going on in crypto because Mark Zuckerberg has a share structure that allows him to keep making these these sorts of bets um so actually I think you could kind of see yeah we'll see how that all kind of plays out in Corporate America but I'd be curious to get your your thoughts on this idea of convex versus concave decision making and in some cases is it actually a benefit right Larry like you

were kind of alluding to at the beginning of this episode what are the instances in our world in crypto dial land where slower decision making can ultimately be a benefit maybe we could start to apply it to some of these protocols yeah like I I read the the piece several times and candidly I didn't fully um digest it but I think I get the general Gest right which is if you're a startup right you really have not much to lose you basically have your shingle and you know your reputation which is not much you may as well bet the farm every single time right and when you're big and you have a bunch to lose you're not going to want to risk everything which is why like large companies they don't make big risky decisions and as a result they sort of Fade Into relevance

right and um and and I think that that's totally true um but my sense is most of the projects that we're thinking about in the Dow space they look more like startups right than large companies that have a lot to lose right ethereum is probably more like a large company than than the daps we're referring to and in those cases the DAP cases they probably should bet the farm you know more often than not because they really don't have much to lose in doing so that's kind of how I think about it at a high level yeah um I I also I I want to aggressively uh Advocate some positive stuff here so let's talk about uh one thing that um one thing that I do so like Jason and I

in in some of those bet the farm uh in some of those beta Farm decision-making actions that have occurred at blockworks in the past do you still have this like informal thing called Brain Trust where it's like all right we gotta make a decision that's extremely impactful for the outcome of this organization oftentimes in areas where we're not necessarily experts right so we have a Brain Trust of people that we trust which I joke about this but honestly it's on my list it's my dad and I like all right I'll talk to my dad you talk to your dad um and then also like whatever friends that we might have that are within these these subject areas employees if you're listening to block works we don't do this anymore but like this was a real thing for like a period of time um and one thing that has uh really

has been interesting to me or I could see the advantage of is if you had Direct access right via the community to this this your core kind of power user right you're like hey guys um maybe we're not floating Capital allocation Decisions by you or like long-term strategic roadmap or sectors that we want to play in but it's like we've got this product we're thinking about doing feature X Y or Z I'm actually wondering I think you could kind of get some some useful if you filter through the the crap I think you could actually get some pretty useful product iteration uh in feedback where you could avoid making mistakes like Netflix did with quickster if you remember when they tried to separate the

DVDs and the streaming service way too early right and even though read was ultimately right on that if he had a if he had a freaking Discord of his his most loyal customers he could have probably gotten some feedback that could have saved that stock a 90 drop if you remember and they recovered and it was fine but that's what I'm kind of wondering if like some access to a community if you weed out some of the responses could it be useful for product iteration I know we were a little bit you know pessimistic on dials but you know we I I'm you know and I am and I know reverie is we're very bullish on him actually right and and the reason we're bullish on them is we see all these problems right and we see solutions to them right

and and to your point like one big benefit of of Dallas and Derek mentioned this is they are open right so the users are in Discord they are in the forums and they're constantly telling you what they don't like about the product that's kind of cool right and I think the Dow teams that look at that and actually iterate on that feedback they will do really damn well um I also think like the fact that Dows are kind of Internet native organizations that anyone in the world can join and coordinate around this token um it it really is a hotbed for talent and so it attracts really really good talent that would otherwise you know be really difficult to incentivize to come come join

um so there's there's so many awesome I think Tailwinds that Dallas have but there's men's problems as well um but you know I think I think a lot of the teams that that work on Dows and really really try hard and are rigorous about the work they do um they they see all these problems and they they look at them as things to solve right and that's the most important thing I think is to address the problems and fix them and I think you know um I think the good Tales will you know fix those issues over time because who do you think is right to be a dow right now so so if you look at a lot of the Dows today it's a lot of the um a lot of the brands were started in like 2018 2019 they really like they really boomed in the in defy summer

after D5 summer we saw a lot of we saw a lot of D5 brands or organizations raise Capital as Dows but really now if you look at a lot of them they're these like you know some 10 to 50 person startups that that don't really operate as Dows and now if you look at a lot of the decks and a lot of the companies that are raising there's like no doubt like very few Dows that are raising um I'm just curious how you guys think it seems like you're a North star for like why Dao is that it's a new Evolution of like corporate structure built for this world that's incredibly open incredibly Global digital first um so I'm just curious like how you think about who is right for a dow and like do you think we'll we'll get the Resurgence of like Founders raising as

you know from the start as a dow in in the next bull market and I'm just curious how you think about that I think the short answer is there's only some use cases within crypto where competing on decentralization and openness makes your product better I think the mistake that has been made a a lot is yeah let's make everything a dow like every single use case in in crypto from Trading to to lending and borrowing to to gaming to middleware like let's just try all of it let's make it a dow right and I think it's

it it's clear that with a lot of those Services right like the thing if you want like maybe reliability maybe if you want like customer support if you want like Insurance like you probably don't need a Dow at least for now it's probably just not even possible so I think just really has to be the The Right Use cases and yeah I I think over time we will see we'll see a Resurgence of folks building Dows raising on that thesis but I definitely think we're in a bit of a trough the same way that after the 2017 like token like Ico boom there was

probably two three years where tokens were were deeply deeply unpopular and the industry was like again I'm generalizing like it was really only just Bitcoin and ethereum and then in 2020 we sort of had every surgeon in tokens so again many of which are not useful and and are not sustainable but I think it's there's a handful or more that that that are interesting and and people and are doing something new so I think we're just a few years behind that with Dows where it is difficult to point to one today and be like that's an amazing example everything's going super well

but if you if you if you zoom out and and and go ahead two three years like I do think that will happen so you know to me Derek leading up to this season I actually went back and looked at some emails and texts and unfortunately public tweets that I had sent about uh tokens tokens in 2019 and like my I was about as bearish as you can get on tokens in 2019 and again this is like a year and a half into the bear like absolute bottom of the market everyone's basically saying like is crypto even gonna work and it it feels I I hadn't thought I hadn't put that together of like my take on tokens back then was is is kind of like how a lot of people are viewing daus today which is like Dows

are dumb no yeah so I like that like the the intellectual like discussions on on Twitter on telegram like that like they're just discussions it changes so quickly most of the largest like token users token holders today at some point in the last two three years like we're sorry like four four five years were huge Bitcoin Bulls right and and nothing else and yeah like it's only it's human nature I think when you see a ton of to be like counter cyclical and to be contrarian when you see and I think yeah anyone

that saw like all the Dow raises in 20 20 21 like didn't take a rocket science just be like some of these don't need to be doubts and I think people feel Justified that a lot of that is is playing out the way that they thought but I think again it's times like these where like the folks that do believe that that that realize there is some utility to to to to Dows and protocols like I think those are the ones that will will will be well positioned in the next cycle whatever whatever that means for you so one thing I'd add is um I think anyone who's worked at a

large company like a Fortune 500 company knows how dysfunctional Corporate America and just corporations are right like these all there's all these meetings all these all hands right all of these weird hierarchical things and oftentimes if you're a junior person you have really good ideas you're not going to communicate those ideas up to the CEO first of all you probably don't have access to the CEO and second of all even if you did you wouldn't have the Hotspot to tell the CEO what problems the company is facing right and there's there's all sorts of stuff that that companies um uh you know have challenges with right because because people don't let the problems um really There's No Escape valve right for the problems and with

dowels I think and this is something I think is really bullish for them is there's a huge Escape valve for the problems right forums and Discord so at all times all of the ugliness is out there right and I think that's like half the battle is just identifying the problems and saying hey the shit's not working you know someone needs to fix it most companies do not have that escape valve and you know and they still function by the way like it still works despite all these huge problems and um and Dallas too right like a lot of them have all these problems they still work just fine right the products are kicking ass and maybe they're not moving as quickly as they should but you know don't let perfect be the enemy of good either so I think there's a lot of really you know good things for

dads as well I am you know I think that question of product iteration and to exactly we were talking about the direct feedback filtering all the way up um I can give you a very concrete example of how that actually helped our business uh we you know host conferences and we had hosted Das for a long time that's our institutional conference and the selling point there it's for banks and hedge funds and regulators and selling point is exclusivity right like all of the verbiage of the the conference was basically around this idea of exclusivity in a very high quality of attendee uh we hosted permissionless with banklust this this previous year and we borrowed from that right we didn't you know we have like VIP this and VIP that and we uh we submitted these proposals to like

uniswap and I remember we just got shredded just shredded in this and you know if we had submitted this proposal to a marketer we probably could have got this like oh yeah this looks like really interesting let me take it up the chain and then we wouldn't have gotten responded to for a couple weeks and then it would have been like I really advocated for you but it's a no the community was like We'll Never assigned anything that's like exclusive we don't want that we want this to be a community event and we pivoted and we changed our entire marketing message we changed how the event was laid out and it was honestly super valuable extremely direct feedback that completely changed an enormous product for us so that's like honestly it's kind of annoying but we were able to weed out some of the signal

from the the noise so it's helped us in the past um look it up it's in it's in governance yeah you can look it up on um they're pretty funny so uh I've got one more kind of uh tactical question on for you and then I wanna I wanna get to some recommendations because I always think about referee you guys are practitioners right and there are people that are out there there may be leaders in Dallas or contributors to communities and I'd love uh to walk away with some sort of actionable advice from this interview uh but I also you know one thing that occurs to me is there like a narrative right now that's been kind of playing out it's a narrative but it's actually a very real struggle for for like what

model is going to ultimately be successful is kind of app chains uh versus layer twos as aware of scaling on ethereum and I think Dao Dao's play a role in this uh and that that form of governance because you know if you think about something like an app chain you're trying to vertically integrate and build the full stack right like a project like osmosis is building the exchange but also like products on top of that that customers are going to want to use and that's entirely uh based on doubt governance right governance now governance making all the decisions that goes into that the base and the product if you look at something like uniswap right they've uh there's a different sort of model which is okay we want the base Dex layer to be governed by a Dao but then there's going to be a Labs

which is company right which is building on top of that which allows for a little bit more rapid product iteration and fast decision making so I'd be curious to get your understanding of how like governance these uh the pros and cons of Dow governance play into this app Chain versus eth scaling kind of road map yeah I mean I think yeah I think a lot of people have options are obviously a super big topic right now there's been a lot of writing about the benefits whether it's with regards to Mev approaches scalability technical design and others and yeah if you boil it down it it comes down to whatever Innovations crypto has

in the future app trains will be the ones that can can actually leverage them and and Implement them whereas on on other l1s they might have less optionality so I think so I think yeah generally speaking like app trains the thesis really is like modular governance and and having more Direct Control it like enables certain use cases that aren't possible on ethereum but I do think over time ethereum L2 is like again they will change they will change as well like the you look at optimism you look at arbitrum and some of the

other relatives today like I think they're very closely aligned with ethereum and and it's very important for them but again I think over a long enough time frame those communities will will grow and they will start to think about their own long-term positioning and and making sure that regardless of what yeah ethereum or like does that they're well positioned so I'm not saying that I think l2s will will be like necessarily hostile to to ethereum or other protocols but I think like as they grow they'll they'll have their own stakeholders that don't necessarily hold these and we should expect

them to to act on their incentives so I I was just to maybe clarify one one minor thing there I was kind of trying to refer to this idea of like if Dao governance is a liability then it seems like app chains are actually slightly more exposed to that liability today than the roadmap that um some of the dapps on eth have taken because if you think about uniswap right like there's the kind of base layer decks but then you have this layer on top there are two separate forms of governance there where products right that users actually interface with are going to be created mostly by uniswap Labs right um which has a that more authoritative like rapid iteration type governance structure whereas for an app chain it's

it's entirely done through dial governance so that was my like do you see that is that is that like an uh apt analogy to use then like more exposure to Dow governance liability in the app chain side or do you not think that's a factor I understand the framing and I think it has some truths but again I think it comes down to optionality right like app chains having an option isn't necessarily mean that every part of the stack is directly controlled by governance I think like option creators and Builders have the option have have the option on which parts to to decentralize which parts to centralize I think if you

take the app train Vision to its extreme where yeah everything from from the consensus to the front end like it's all as the centralized as possible then yeah the the the the obviously the scope of governance is is much bigger so I think yeah app trains there's definitely more governance generally but I think it's more about I think of it more is is having more optionality in how to like use that governance Let's uh you know maybe in terms of I know we're a little limited on time here but I'd love to get to some uh more kind of prescriptive or practical advice um Larry I know you wrote this piece for for reverie uh basically it's it's we'll

link it in the show notes but it's called musings on governance and there's some kind of actionable you know you're sort of lay out some some problem areas or some issues for for daos or that a lot of dials are sort of struggling with and then kind of what reverie's uh prescription would be right for how to move forward or how to think about it um there are a couple that you laid out so uh treasuries so treasuries aren't funds or endowments or other pools of capital um the interesting issue of sometimes contributors having outside agendas or you know undisclosed interests uh committees uh diluting accountability um uh conflicts of uh are basically governance being politics and and not necessarily shying away from that so I'd love to get your your kind of thoughts

on what you think some of the the most important issues that Dallas are facing today and as maybe prescriptive as you want to be like how would you advise Dows that you're working on for for dealing with them I think the number one thing like by far is to have the right people sitting at the table right so the decision makers need to be chosen very carefully at least on the early stages the risk in not doing so and we've seen this a lot right and I'm sure you guys have as well as when you introduce too many cooks in the kitchen it becomes analysis paralysis and decision making grind style hall right and so I think early on it's really important for the team like the early stage team to to basically say okay we are clearly the

best people for the job right we have the most contacts the most experience the most history the most vision and over time bring people on board very selectively I think that's like by far the biggest thing if you don't do that right and you Empower just completely random people um it it becomes a quagmire like a political Quagmire and I think the competent people the people who actually want to do really good work they see that political Quagmire and they just don't want a sling mud right it's it's not interesting to them they just want to do cool stuff right and be productive and as a result when they see it they leave and I think that's really really dangerous to Dallas so the number one thing we'd recommend is always have the team be really involved in figuring out

who's sitting at that table um initially I'd love to actually get your uh like totally agree with that um maybe if I could pick on your thoughts for Dow treasuries actually specifically because there's a lot of discussion uh around them I think uh like you what what you wrote really resonated with me because if you think if you look at how treasuries are managed in Corporate America it's basically you want the finances of the business to not impact or support the operating decisions of the business right so that's why corporate treasurers tend to be very risk-averse and most of your assets are basically just want to keep up with inflation right that's why they're in very short dated treasuries with um you know like and you're not taking basically outsized risk the way that I've kind of heard Dow treasuries talked

about sometimes is oh yeah we're going to engage in all these complex derivative structures which is like delta neutral yield farming and all this stuff and I'm just like are you optimizing what you should be optimizing for there which is just to not run out of money and you know so I'd love to get your your kind of thoughts on how you think we're going to see that that field evolve this is a huge pet peeve of mine right like having Dows manage treasuries like hedge funds like Dallas should not be using their balance sheet Capital right their treasury to uh to make risky bets to make Venture Investments to buy all these Hedges right to invest in derivatives because you know investors basically give money to Dallas right and if investors wanted to do all that stuff themselves they

would have done it the reason they invested in the Dow is because they believe in whatever that Dow's doing they're not investing in the Dow to do all sorts of you know hedge fund activities and I think when you see that sort of stuff a lot of it is you know just service providers trying to bamboozle the doubt right and make a personal dollar and you know you see this in the traditional world too and I think unfortunately you see it in Dow land but you know I think most of the well-run Dows they they don't engage and that sort of stuff in fact I don't think any of them do and it's it's really that the Dows that don't know better that they they you know use their their balance sheet their treasury as a hedge fund um and it's it's obviously a huge

problem in the space right it's a honey pot of money and so people are attracted to it but I think you're right like that should be extremely uh risk-averse when it comes to that sort of stuff they should just hold you know some cash reserves for you know Runway right maybe two to three years two to four years um and um and not speculate with the rest um guys uh I I love for I mean the audience can can tell right I think just from up from our chat so far that that you really have a deep understanding of working with these Dallas communities kind of getting your hands dirty on the ground but can you just tell everyone a little bit about what reverie is and if folks want to follow uh more of your work or find out more about the work that you do or connect or whatever it is

like what's the best way to do that yeah the you know the best way to understand reverie is to understand that recognize background you know we were former VCS in this space I was at digital currency group direct was at blockchain Capital and you know we were investing in a lot of startups and as a result we were not able to get super Hands-On with any one company and we wanted to do things completely differently every and so instead of what we do is we get super Hands-On with very few companies at any given time and you know at a high level wherever he is it's an advisory business and an investing business so we get super Hands-On with a few companies most of them are Dallas but we work with companies too and we basically are operators in the trenches alongside the team then we make small Investments as

well awesome guys um well I will I show one more part of your business which is the I pledge allegiance uh podcast as well which is phenomenal uh listeners to on the margin in belcair have probably heard his uh podcast I pledge allegiance uh a lot of I pledge allegiance references um so you guys have done uh great work especially kind of fleecing out some of these ideas about Dallas and governance um so I I highly recommend listeners if you enjoy this program especially this season uh you know if there was a Godfather to the season kind of a Guiding Light it was definitely you guys and the work that you're doing it I pledge allegiance so um yeah it was an honor to have both you on the show uh thank you for sharing your thoughts and yeah we'll have to do

it again soon thanks a lot Mike thanks a lot Jason thanks dude thanks for your time cheers [Music]