The intangible company
What is a company? Basically, it is a group of shareholders who allocate resources to a commercial or industrial activity, a common purpose for which they bring together employees to focus their different talents and organize their skills and resources collectively to achieve specific and stated goals.
What if we were to reduce that structure to the absolute minimum? If we were to allow shareholders in, creating a transparent system of decentralized decision-making, without the need for any kind of manager or control system beyond the operation of these mechanisms, what would we find?
An interesting and easy to read article in Venture Beat talks about the decentralized and autonomous organizations known as DAO, which some people say are the companies of the future: a structure lacking physical address, no employees and no managers, just a series of contracts with external professionals whose activity is controlled and registered through blockchain.
This is a fully distributed governance model in which decisions are made simply when shareholders support or withdraw their support for contracts submitted or under way, so that those who do not meet the required performance levels are eliminated from the organization quickly and efficiently. Consider any company, and try to reimagine it with all the workflows that integrate it carried out by independent professionals, via contracts controlled through an infallible record. The organization decides which professionals do what, sets rules for those contracts, pays them when they are delivered, and replaces those professionals if they do not come up to scratch.
The incentive for these contracts to be delivered in the best possible way is simply that if they are not delivered on time or do not meet the expected quality, they stop working with the organization because shareholders would withdraw their support for that contract. The company becomes simply a series of contracts managed in a decentralized and completely transparent manner, and since it is only a series of people who have allocated funds to a common project, without even having to legally establish any entity, they can be anywhere in the world, making it difficult to speculate about the legal system they would answer to.
The first attempt to create a DAO was a company called precisely The DAO, and it was a disaster, clear proof that things do not always go well at the first attempt. After becoming the largest crowdfunding project in history and raising funds equivalent to $120 million in virtual currency dedicated to venture capital, the company, which had published the full code of its activity in open source, with some vulnerabilities detected, was hacked, losing more than a third of its funds (although finally, and after a decision that generated a strong discussion in the Ethereum community, the contract was rescued and that transaction was annulled).
The idea of a DAO is based on an internet maxim: reduce transaction costs to the minimum. At a time when there now exists a system can reliably record all transactions, the need for management structures disappears, inefficient in the face of a completely decentralized model in which shareholders freely decide if they support or withdraw support for a particular contract. These will be ethereal company, virtual and intangible, with no bosses, just the expression of the interests of their shareholders related to a common project: organizations made up of people who carry out certain activities in a completely decentralized manner. For the moment, we are talking about purely experimental issues and possibilities that are being defined practically as they go along. But over time, we could be talking about the future of organizations as we know them. Or at least, a line to explore or follow…
(En español, aquí)
