How can DAOs best get new products and services into the world?
The discussion on SubDAOs that Coopahtroopa’s post on this topic created was great to see, as it got more people thinking about alternatives to traditional scaling approaches that don’t work. Most DAOs should be thinking reproduction, not becoming a monolith. But how would that really work in practice?
One thing that is clear is that if we want to make DAO reproduction work, we need the DAO equivalent of a doula to help things go right, from idea to a new DAO (which I'll call a child DAO to avoid the confusion about whether a subDAO is in the original DAO or separate). This is most clearly evident in Jesse Walden’s notion of "commoditizing the complement" for a Web3 protocol or platform as a way to drive use compelling products on top of a protocol.
When we look at how we get a product off the ground, we find that there are 3 main sources of uncertainty that makes products fail. Our approach needs to address all 3.
Customer Uncertainty: Can we create something that others want? It's not easy to build something that is beautiful, powerful, and innovative. The ugly truth is that even if what we build is all of those things, it’s not enough. If the product or service does not help someone solve a problem or fulfill some kind of need or desire, it's worthless.
Business Uncertainty: For a product or service that others want, can we actually create and deliver it for less than what someone else is willing to compensate us for? Every DAO has finite resources and a limit to how much risk it can tolerate. If we can't stay within those limits, it doesn't matter how much customers love the offering - we won't be able to sustain delivering it.
Growth Uncertainty: Can we replicate what we are doing enough to where we can do more of this, while still delivering what the customer needs and keeping it within reasonable resource and cost limits?Just because something is sustainable does not mean it can be replicated. Perhaps the magic come from a rare resource or (rarest of all) a talented person. We’re not building any hyperstructures out of that!
If we can crack all 3 of these nuts, then we have something that is a prime candidate for a child DAO, because it can sustain itself. At that point, spinning off a child DAO is not just possible, it’s advised. The child DAO will require dedicated focus to grow and change, and creating a separation makes that easier.
Just creating a child DAO, though, only addresses the end stage. How do we navigate the uncertainties on the path to a child DAO? The best approach I have seen to addressing these 3 kinds of uncertainty come from a brilliant thinker named Simon Wardley. He introduced a concept called "Pioneers, Settlers, and Town Planners" that is a compelling approach on how to navigate these conditions. This approach inspired the “proof of concept → prototype → pilot” progression in the Impact DAO playbook.
Wardley's key insight is that people who are good at making the impossible possible are not typically the same people who are good at making the unprofitable profitable. And making the unscalable scalable is the province of a different type of person too! Thus, he suggests having 3 "cultures" for product development:
Pioneers focus on customer uncertainty. They take what exists in the world and add to it, and push the envelope on what is possible.
Settlers focus on business uncertainty. They take what pioneers find or create and structure them into something that is sustainable.
Town planners focus on growth uncertainy. They take those viable items and standardize them so they can be made widely available.
These skillsets are different, so while you might have a visionary that goes along with the idea to shepherd it along, they need help from folks that can help reduce the uncertainty in each phase that is most likely to cause premature death of the product or service.
The use of the word "take" in the descriptions above repeatedly was not an accident. One of Wardley's concepts is that pioneers, settlers, and town planners are constantly looking to "steal" concepts, prototypes, and platforms that they can turn into more valuable offerings. This notion is a perfect fit for Web3, as composability is well suited for this.
Pod structures are again an ideal way to handle this in a DAO. Each pod can have a distinct set of skills and practices, yet together they help ideas go from jokin' to token. Once through all 3 pods, those items are then spun off into a child DAO, with appropriate rewards for everyone that helped bring it to life. At child DAO launch, the parent DAO gets a subset of the child DAO's tokens, so they share in the potential upside.
Under the umbrella of a shared adventure-vision, these DAOs are natural collaborators, and as they spawn more child DAOs, the amount of energy being directed at that adventure-vision increases. Each DAO can respond nimbly based on its unique needs, while collective progress accumulates. Sounds like a winning formula to me!
** This post is heavily based on a series of messages I originally posted in the Orca Protocol Discord server between 2021-12-07, with modifications to address feedback raised, improve clarity and reflect (hopefully!) improved thinking since then. Thanks to all in the Orca Protocol (now Metropolis) community who provided input, feedback, and support regarding these concepts.