The Cryptoventure

In our last few posts, we covered how information networks and platforms expose the limitations of the corporation and how crypto presents a “native” model to address them.

In this post, we start sketching out the central entity to making this model work: the cryptoventure. We believe it could become the spiritual successor to the corporation and, ultimately, spark a new mode of capitalism for the Information Era.

Unbundling the Corporate Entity

  1. Fundraising
    Capital was scarce and it was difficult to raise in large amounts for large-scale outlays (e.g., railroads).
  2. Governance
    Rules and frameworks were needed for strategic decision-making given the separation between principals (owners) from agents (managers).
  3. Coordination
    Managing a large and geographically extended workforce was too costly without a strong overarching structure and employment relationships.
  4. Economic Distribution
    Shares, closely held and valued on future cash flows, were the primary, albeit imperfect, means to participate in and distribute economic value.

Fast forward to today, and the context for these activities has dramatically changed, partly due to the economic success of industrial capitalism and partly to the rise of information technologies, especially crypto:

  1. Fundraising
    Capital is abundant and far easier to aggregate, and moreover information-based projects require relatively little capital.
  2. Governance
    Key aspects of control and strategic decision-making can be encoded in open, ecosystem-driven, and algorithmic protocols.
  3. Coordination
    Management is dramatically easier and cheaper with the rise of information work, the Internet, and a global population of contributors.
  4. Economic Distribution
    Well-designed tokens reflect value creation/demand and accurately distribute it to every participant in the ecosystem.

When it comes to information-based networks and platforms, the joint-stock corporation may well be solving for problems that no longer exist. What’s worse, it may be hurting our society and economy, as we and others observe.

This raises a tantalizing question: what is the right venture entity for the Information Era?

A New Kind of Venture

What we can say with confidence is that (i) this entity will have crypto at its core and (ii) we’ll have the opportunity to shape it for the society and economy we want to live in. Here’s a comprehensive, even if not exhaustive, outline of aspirations to work towards:

Philosophy & Ethos

Entity Structure & Incentives

Product, Protocol & Token Design

Ecosystem Economics

Financing

Governance

Legal, Tax & Regulatory Compliance

Lifecycle

  • Pre-Token: Creators raise a round or two of high-risk capital to hire a core team, experiment with ideas, and build out the v1 network and product.
  • Token Launch: Teams look for indicators of product-market fit to hold a customer-focused token sale and open up the network to the public.
  • Post-Token: From this point onwards the project can sell tokens in the market to fund growth, operations, etc.

The lifecycles for cryptoventures vs. corporations seem much more alike than different at the earliest stages, but they potentially diverge sharply at product-market fit and raise new questions about M&A and end-of-life.

The outline here is just a start, we’ll expand on each of these topics over time.

So far we’ve been pretty abstract, focusing on the frameworks and mental models we’re using to make sense of crypto and its potential economic and social impact. Next, we’ll start applying them to explore new kinds of social contracts, value propositions, business models, and organizational structures.

As always, feel free to reach out to either of us anytime or subscribe below!

Commons

Toward Crypto’s Long-Term Promise