Rabbit Hole Studios DAC - Vision & Roadmap, Revamped

Greetings anon!

It’s been a while since we last spoke. The Rabbit Hole Studios DAO withered away due to various challenges. First of all, I got married and have a baby soon to arrive, but the bear market didn’t help either. We struggled to find motivated contributors in the blockchain realm and chose to focus on IRL events, business management, and other forms of engagement. But we’re coming back! We plan to restart our efforts to publish music and art on the blockchain, but first, we need to get all these other ducks in a row. Let’s talk about these ducks! We are offering new incentives like sweat equity tokens under a for-profit DAC structure (Decentralized Autonomous Company) and announcing a proposal for our community to adopt various sociocratic mechanisms for managing our coworking space and community center.

What is sociocracy? It’s a managerial template for distributing power and responsibility for a group of equals aligned with a shared purpose. It’s a system of autonomous circles that help envision, direct, coordinate, and complete the work required to grow and succeed as a business. I believe the affordable and carbon-neutral Layer 2 blockchain networks are the safest and most efficient way to base our DAC. They help us decentralize power, securely store shared assets and govern at scale. So we’re proposing this roadmap for how we get there and the tools we plan to use. Starting with the wise words of blockchain governance thought-leader 0xJustice.eth.

On-chain organizations are certainly an innovation and represent a discontinuity with the past, but we lose too much if we abandon all sense of historical continuity. Web3 is an evolution and advancement of Web2, not a repudiation or rejection of it. We should replicate what has worked and then improve it. We reject the reactionary opposition to anything that looks like traditional organizational structures. 

Businesses are not, by definition, exploitative or mindless top-down meat grinders. Many early visions of business were purpose-driven and lean, and leaders like Edwards Deming championed bottom-up decision-making for decades. All good companies have positive externalities. Lean practitioners have championed this forever.

"Great companies are not in business to make money; they make money to stay in business and accomplish an important purpose." - Mary and Tom Poppendieck.     

I’ve been focused on researching decentralized org design for many years with fascination and curiosity for how this new technology can support worker-owned co-ops. I’ve learned that these protocols can revolutionize governance, increase resilience and enhance cooperation. I think the tech stack has finally reached a point where we can legally and efficiently begin to transfer ownership and governance over to blockchain protocols that track our contributors’ sweat equity and grant legal claims to any future capitalization of the company. I have spent close to a decade pouring every dollar and spare moment I have to make this dream a reality and took considerable risks to lay the foundation. Now, with a little one on the way, we are setting our sights on how to fairly and efficiently share equity and responsibility with our community members so we can focus more on raising our love child!

I believe the people who share our vision and our love for creative community space and who volunteer for our sociocratic governance circles should be rewarded with actual equity in the company. By aligning everyone’s interest in the success of the space, we can increase the dedication and quality of our contributors and share the upside of our business as it grows. I believe the key to success is not total centralization of power (or top-down pyramidal power) nor is it total decentralization (or bottom-up/flat orgs). My aim is to create a rounded dome shape of power (somewhere in the middle between the flat circle and single-pointed pyramid), driven by small groups of motivated contributors incentivized by sweat equity. Read more about the principles and techniques we’re inspired by here:

Whenever companies are bought or sold, they hire a business appraisal service to provide a fair market valuation of the assets, liabilities, and future income potential of the business as a whole so that existing shareholders can be properly compensated. I am the sole investor in this space and have spent well over $500,000 to invest in assets and cover losses since we began. So step one is to hire a company that can fairly evaluate where we’re at now and then agree with our members that this is what I am owed if ever our company is sold or capitalized by outside investors. We hope to have this accomplished before we refinance our mortgage in August.

In the meantime, we’d like to invite you to apply for a seat on one of our governance circles and receive sweat equity tokens for your help managing the space and coordinating our non-profit community activities. We’ve tried raising funds via OpenCollective but haven’t got much traction. We thought about converting to a non-profit but there would be no way for us to cash-out our investments and it adds considerable overhead in the legal and finance realms. We’re also exploring government grants or low-interest loans for unincorporated non-profits or low-income-area community services, which our weekly schedule of free, open events may qualify us for. The point is, we need a better way to incentivize contributors since we lack the budget to expand our staff. We have many devoted contributors, like our dear friend Sean T Conlon, who have been volunteering to host events for our community for years and they deserve to have an equity stake in this company.

We plan to use SporosDAO to accomplish this. Why SporosDAO? It allows us to create legally-binding, non-transferable equity tokens that our contributors can cash-out if ever the business is sold, merged or capitalized by outside investors. That means those tokens become redeemable for cash on a 1-1 basis when that occurs. Each month, our collaborators will submit a ‘shift report’ to the DAO/DAC requesting these tokens as ‘payment’ in the amount of $25 per hour for the time they spend working on these governance circles or completing to-do list tasks. Our board may also elect to pay some staff members a cash stipend in addition to equity tokens. The tokenholders (or stakeholders) will then vote to approve these requests and dispense the tokens to that member’s blockchain wallet each month.

Sadly, because we don’t sell alcohol at our events (which is what most venues rely on for their income), we’ve had trouble finding sustainable revenue streams. We chose not to sell alcohol so we can adhere to our mission to create affordable and safe space for creative people, specifically people in recovery from drug or alcohol abuse. So in order to keep our community space and weekly regimen of free events alive, we’re asking for your help to become a contributor to our member-owned DAC in exchange for these sweat equity tokens. The members of this DAC will elect members to our governance circles and vote on major policy changes.

We face significant hurdles financially, as any start-up company does, and the financial/workload burden has grown to be too great for me to do this alone. The alternative to this bootstrapping mechanism is to build out more offices and reduce the free community event space or sell the building and try to downsize to something smaller and more affordable, perhaps further away from town. Selling is our last resort. We’d much rather find investors and/or sweat equity partners who want to stick it out for the long haul. Our strategy is to spend future equity value to invest in community leaders with the hope that this will increase revenues and provide better service to our members and our community. So this is our call for help and an invitation to become part-owners and not just members.

My wife Victoria created a beautiful document outlining our vision for these governance circles (and how they represent core universal concepts like the 7 notes of the scale and 7 chakras!) which you can view below. Feedback is welcome. Let us know which circle you want to be a part of!

We plan on using Discord as our staff/governance chatroom. Join us there if you wish to engage in the governance process with us! We’ve also created a Trello board, which you can join by clicking here. Lastly, we’ve created a folder full of images and documentation for learning about sociocracy and how we can implement it in our governance process (you can view some of them below). Please review all these details and protocols and let us know if you have any questions! More information is coming soon :)

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