This Week in Startups - Breaking down Rivian’s IPO & $100B valuation + DAO deep dive with OpenLaw’s Aaron Wright | E1324

Episode Date: November 11, 2021

First, Jason analyzes Rivian's IPO and gives his thoughts on the current valuation (2:05). Then, Aaron Wright from OpenLaw joins (22:13) to discuss Decentralized Autonomous Organizations (DAOs). At OpenLaw Aaron has helped launch 9 DAOs by providing legal structure, tooling and infrastructure. They talk digital contracts, why Aaron thinks DAOs are better for investment decisions and more!

Hey, everybody, we have a great show for you today. I am going to interview Aaron Wright. He is from Open Law, a company which is Bree branding to be called Tribute Labs. Long and short, he is the smartest individual in the Dow space. He set up a dozen of these DAWs. They're all crushing it. If you don't know what a Dow is, it's a decentralized autonomous organization. It's a fancy way of saying a collective of people in a chat room who make financial decisions according to a smart contract and voting based on their ownership. Anyway, it's a new world, kind of like LLCs, but programmable. It's all the raging crypto. And I actually think that this is one of the great use cases for crypto. And so we're starting to see now, hey, my skepticism of the ICOs and Bitcoin and some of the stuff is now starting to when we get to the application layer, starting to make sense to me. But before that, speaking of disconnected from reality, Rivian has IPO and it's worth $100 billion.

I'm going to do a lot of math on this. They've only delivered like 150 cars and they delivered them to their employees. This is a bit crazy. It's totally disconnected from reality. I'm going to take the whole thing apart piece by piece. Stick with us. This week in startups is brought to you by. Dell for entrepreneurs wants you to stay connected to your business no matter where you are. Go to launch.com slash Dell to take advantage of Dell Technologies' Black Friday sneak peeked sale. Save over 45% on some of Dell's latest products and unlock exclusive discounts. Our Crowd helps you invest early in pre-IPO companies alongside professional VCs. If you're interested in investing, you can join Our Crowd for free at OUR-C-R-O-WD.com slash twist.

And M-Broker's Startup Insurance Program helps startup secure the most important types of insurance at a lower cost and with less hassle. Save up to 20% off traditional insurance today and at Embroker.com slash twist. While you're there, get an extra 10% off using offer code twist. EV startup Rivian started trading on Wednesday, and the stock has popped 60% and peaked at over a $100 billion valuation. They, of course, have no revenue. So as of midday Thursday, the stock settled at around $117 a share.

that represents around $100 billion market cap. In other words, it's worth what Airbnb, Uber, and other companies that have tens of billions of dollars in revenue is worth. And those are obviously much better businesses. The company has made zero revenue as of their S1 from October 1st. Their projected best case scenario for Q3 is a million in revenue. Obviously, quarter three and September 30th, for those of you who are not familiar. And as of September 30th, Rivian reported 48,000 pre-orders for both the R1,000.

T and the R1S. This is their pickup truck, which is pretty good looking. I think it looks essentially like a pickup truck with a nice set of lights. Not really much different than a pickup truck you might see from Ford, to be totally honest. And I think that was their design choice, was to just say,

hey, this is really easy for somebody who owns a Ford 150. Of course, since they announced, Ford announced that they're doing an electric 150, So I think that's going to be a big problem for Rivian, to be totally honest, because Ford can lose money on the 150. I don't think Ford is as far behind today as it was when Tesla came out over a decade ago. So let's put that on the side for a second.

These customers paid a cancelable and fully refundable deposit of $1,000. So they have $48 million in deposits. Remember Jason's law, I tell you about this all the time. if a company has a billion dollar valuation before they have revenue or a product in market, it's either a fraud or it's going to fail. This has been true almost universally. We saw it with Nicola. We might be seeing it with Magic Leap unknown if Magic Leap's ever going to get to profitability or products in market.

It was the last time anybody used a Magic Leap product. Theranos falls into this category. Nicola Quibi. which, you know, wasn't a terrible product, but wasn't a great product either. And I give them credit for trying, but it did command a huge valuation. So I always get worried when the valuation gets too high compared with the performance. And that's coming for me as an investor in private companies. You would think I'd be like, yeah, let it rip.

You know, it's good for me if these things rip. Why wouldn't I, as an investor, want to see valuations disconnect from reality? Well, because I don't think it's sustainable. I would like there to be a sustainable environment for startups and for high-tech companies. A company with no delivered vehicles becoming worth $100 billion is absolutely insane. Now, this might be a case where Jason's law does not actually wind up applying. It could wind up not being a fraud and it could wind up being successful. I think Nicola Fisker and some of these other electric vehicle startups are nowhere near where Rivian is based on what I can see.

It has an estimated range of 314 miles. It starts at 67K, but I don't think that's the actual price. I think it winds up being closer to, you know, 90 or 100. As of September 30th, 2021, we produced 12 R1Ts and delivered 11. Now, all of these vehicles seem to be have delivered to their employees. In other words, it sounds like they're bespoke, handcrafted, vehicles. This is what Tesla called the founder series, or basically prototypes. So by October 31st, we produced

180 R1Ts and delivered 156. So that's 145 delivered in October. I guess they timed this to be when they were delivering their products, quoting Rivian. Nearly all of these vehicles were delivered to Rivian employees and we expect to ramp deliveries to third-party consumers as we increase our production rate. That's a big red flag. It's not. not uncommon to give the first ones to employees. Obviously, the employees are not going to rip it to shreds. And the founder series at Tesla did go out to the early investors.

I had a founder series of Model 3. Obviously, people famously know I have signature of 001 of the Model S. And that's a collectible that I think I'm going to maybe donate to the Smithsonian or something. I don't know if there's a place where I can donate this million dollar car so I can get out of my garage and they could maybe insure it and put it on display. there's a car if they if I and listen the folks at Raleigh Road I got to get back to them

they were very nice they wanted to auction off the signature one and my Roadster 16 I haven't done that but I would like to put them in a museum somewhere if somebody wanted to if there is there a great museum that takes these cars and you know we'll take custodianship of them and I don't know if I want to give it to them yet or donate it but I would like to just have it on display

somewhere like two of the first be kind of cool so here's a tweet from a Rivian employee Travis Munson on October 22nd. The R1T truck has been driven and reviewed by the press, though. Bloomberg, Mototron, Roadshow, and CNET. And they've generally been positive, noting the large storage space. Bloomberg noted the truck is cute, but not a badass pickup truck. I'm not sure I'm looking for Bloomberg for their take on these.

Amazon and Ford own about a third of the company combined. And those are really two good votes of confidence. Amazon owns 20%, which is now worth over $20 billion. I wonder if that's Bezos trying to stick it to Elon. They have that little back and forth over rocket ships, and Ford owns a 12% stake valued it over $10 billion. So you have to wonder, like, what's going on with the relationship with Ford and Rivian? Ford just, was it six months ago that they announced the electric F-150?

And they kind of surprised the market with that announcement that this was coming. And like, Ford owns 12% of a company that they're the number one competitor of. I mean, how does that work? I mean, obviously Ford is getting an education here, but I don't think they're hedging their bet at all. I think they want to win the category. So that's got to be interesting. At 12% you would have a board seat, but how do you give a board seat to Ford?

Maybe Ford thinks they have a chance to buy the company, but now that the market caps $100 billion is more than what Ford's worth. So Rivian, with $0, well, with 150 cars delivered to their employees, could buy Ford or be an equal merger. It's bizarre. I mean the world has literally gotten disconnected from reality. That doesn't mean Rivian is not a real product, a real company. So let me be clear about that.

actually think they're more real than like, let's say, Fisker, which I think is going to be just a total washout like Nicola, because Fisker, everything he touches seems to die. You know, it's like the third time they resuscitated the carcass of Fisker, and their cars are ugly and gross, and I never liked him or the cars, I'll be totally honest. In the 2.5 years prior to growing public, Rivian raised $10 billion, over $10 billion.

Most recent round they closed was $2.5 billion in July. They raised almost $12 billion for the IPO, which is great. they have a war chest, so good for them. Amazon has ordered 100,000 Rivian delivery vehicles to be delivered by 2030. So that is a pretty big deal to have Amazon as a customer and obviously

Bezos cares deeply about the climate as do most, I think, people in the world who have any trust of the scientific method or have read a newspaper or opened their eyes and gone outside and seen the extreme weather. According to CNBC, Rivian reserves 7% of its IPO allocation for a direct share program for people who preordered. And apparently, you know, collectively, the headline is they made millions of dollars.

But I think it was 175 shares is what they were allocated each. Somebody can fact check me on that. Which means, you know, people may have made enough not to cover the cost, but it may have made a little bit. It's that time of year again. The holidays are coming up. And have you been thinking about upgrading your tech? I bet you have. And if so, you can take advantage of Delphiote.

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And you can save up to 45% today at Dell.com slash twist. No need to wait to block Friday. You can do it right now. So just looking at market caps of other company, GM, 86 billion, 4, 77 billion. And Daimler, which makes Mercedes-Benz, you may have heard of them, is 108 billion. So just absolutely crazy, disconnected from reality. Rivian's losing a ton of money, as you would expect, for a company that is pre-launch. It's really hard to build these. First nine months of 2021, they lost just over a billion dollars. Again, that's not shocking.

That's to be expected. And they're planning on offering a subscription service to customers to create reoccurring revenue streams, services they're planning, telematics-based insurance. I think that's something Tesla is doing as well. Proactive vehicle service, like maintenance and repair. I think that's also something that a lot of people order, maybe some software updates. So I don't think that Rivian is going to really be able to beat Ford. They're certainly not going to be able to beat Tesla.

But they do have close to $20 billion in cash. So they're going to be able to put up a good fight. They're going to be able to lose money. If they lose $2 billion a year, let's say, $3 billion a year, they're going to have something like five years of runway here. And that's probably what they should do. They should probably make a really good go of it, lose. money on every car or break even on every car and really try to build something important in the world.

But you have to also remember, like, self-driving is going to be a big piece of this. So I don't know that they have the charging stations, the self-driving. But the delivery vehicle space, I think, is going to be a very real one. Of course, you have to ask yourself, what if Tesla decides, you know what? We have the cyber truck coming. They've got, I think, a half million. The last I remember was 500,000. So the cyber truck has 10 times the number of deposits, I believe, for cybertruck.

Somebody can fact check me on that. So I think they're going to have a hard time competing at Cybertruck and F-150. I'm going to guess a Rivian comes in third to those two competitors. It's obviously going to come third to that. Oh, wow. Cybertruck has over a million deposits now, so 20 times what Rivian has. Rivian should be worth, if I gave them just an incredible amount of credit. if you gave Rivian a million dollars in valuation for every truck

they'd sold, that would be $50 billion. That would be kind of crazy because you don't make a million dollars off each one. So if you gave them $100,000 in value, it would be worth $5 billion. I think $5 billion would be a fine valuation for Rivian right now. But obviously they've raised all this money, so they have to have a valuation over $17 billion because that's how much cash they have. So maybe double that $40 billion. Even there, it doesn't make much sense.

I think it's a terrible stock to own right now. I wonder if Tesla Q and the folks who were betting against Tesla all this time, if they were betting against Tesla, as Tesla was delivering hundreds of thousands of vehicles and was making all this progress on self-driving, and had the supercharging stations and the gigafactory, and the power wall technology and solar, and was doing electric grid work,

if they were betting against that for five years, 10 years, and shorting it. I wonder if Tesla Q would make all the money they lost on Tesla back shorting Rivian. I would not short anything in this kind of stock market because nobody knows when this madness is going to end. When I say madness, I mean the overvaluing of massively speculative stocks. My best advice to you all, the public out there, and I hate to get financial advice, is you really need to think, do you want to be placing bets on companies without product

market fit at extremely high valuations? That is what I was talking to my brother or my mom. And they were like, hey, should I place a bet on this? I would say, well, are there other companies that have the same valuation that are growing and that have a large consumer base like Airbnb, like Uber, like Robin Hood, like Coinbase, like Stripe? I mean, there are many companies that are in a similar valuation range that have massive amounts of revenue.

And, you know, depending on the company, tens of millions to hundreds of millions of paying customers. Why would you place if you could, it's not like this is the only bet you could place and, you know, including versus Fisker or other speculative companies, Nicola. If you're going to place speculative bets, you should get rewarded from them and you should have a evaluation commensurate with the speculation. So if it was worth $5 billion, $10 billion, even $20 billion, I'd say, okay, maybe you want to take a speculative bet here, sure, but at $100 billion, I don't know how that makes it. any sense. Okay. So that's my thoughts on Rivian. Congratulations on securing the bag. That's job

number one for the team there. I mean, delivering the vehicles and securing the bag at this point in their lifespan and their timeline, both of those are equally important because these things are expensive to produce. Factories are expensive and this is real world research and you're up against Tesla, which I mean, good luck. I mean, and Ford, good luck. I think these guys are roadkill. I'll be totally honest, I don't think they're going to carve out a niche. I mean, just, this is like going up against like Facebook and Google for ad revenue, right? Like, sure, Twitter's trying. Sure, Snapchat's trying.

But going up against the duopoly of Google and Facebook in the ad space, you know, just very hard. There's kind of a doopoly here as well. I think Ford and Tesla with Cybertruck, these are two. and I'm just talking about the truck sector. These are two people who really are crushing. If you look at Ford, their profits come from trucks and they have the Ford Transit. Do you think they're not going to produce an electric Ford Transit and then absolutely just roll over Rivian's delivery vans?

Of course they are. And then what if Tesla decides, you know what, the model why, if we just build it a little taller, they can make a transit competitor immediately. The amount of time we take Tesla to create. I don't have any inside information here. Obviously, sometimes people think I do. Because I know some people at Tesla. The Model Y could be a Ford Transit competitor,

I would guess, in under a year. Like, they already have those factories, and making it a big, giant box, it would have the same dashboard, the same seats up front. It would just be a little bit taller. Not much. Same drive train, same self-driving.

It would just be taller and maybe have sliding doors on you. side. It would not be very difficult. I got to think less than a year to just make a Tesla box. So anyway, good luck. It's kind of crazy. And then for people who are speculating on stocks, please, I hate to get financial advice, but I hope that you've paid down your credit card debt. I hope you own your home. And if you're placing speculative bets, just get some thinking around index funds, get some thinking around, you know, wealth front and having a balanced portfolio and thinking about when you're going to need that money because the market could crash

and if the market does crash, who's going to get hit first? This is what I would encourage you to think about. If we have a correction, over 20% correction, who gets hit first? The speculative stocks with no customers, the companies that are emerging with,

you know, tens of millions of customers or the companies that have hundreds of millions of customers. Well, I think it's going to kind of happen in that order. The companies that have hundreds of millions to billions of customers are going to be the places where people retreat, the places that have dividends, establish revenue streams,

and then who gets hit first? I think it's going to be the massively speculative ones. So buying public stocks in this category is kind of like doing what I do for a day job, but we invest at tens of millions of dollars, and they're asking you to invest in these companies at tens of billions. So just do the math people, is all I'm imploring you to do, is just do some basic math. take the valuation of the company,

take how many cars they delivered this month, times it by 12, divide those two numbers. So if we were to divide those two numbers, in this case, they delivered whatever, 150 cars. Let's round it up to 200. That's 2,500 for the year. What's $100 billion divided by

2,500 cars delivered? That's the valuation per car. So, if we were to do that math, equals $40 million per car? Somebody check my math on that? $40 million per car, if we give them credit for delivering 200 cars a month, a third more than they delivered this month,

and then at times at times 12 months. That's $40 million for a car. Now, I know it's a little bit of funny math, right? Well, the math is sound, but it's an interesting way to look at it. Well, that's how other businesses get judged, you know, either earnings, revenue, customers, et cetera. You really can't value a company this high.

even if we gave them credit for 25,000 vehicles, like 10 times that amount, it would still be valued at $4 million per car. And that's maybe what they do two years out or something, right? So this is a bit crazy. It's disconnected from reality. I don't know how many ways to tell you folks when something is disconnected from reality.

I nailed it on Nicola. I nailed it on Theranos. I nailed it on Tether. I know of what I speak because I do this for a living. this valuation is disconnected from reality. Take the $17 billion out, you get $83 billion. $83 billion. You take out the cash.

Is it worth that? No, it's not. Clearly not worth that. So be careful, folks. Okay, next up, a really great interview with Aaron Wright from Open Law. And we, he's basically the guy. He's the guy who set up all these Dow's. He's the Dow King.

He's creating the AWS and the legal framework for Dow's. He's doing it for NFTs. He's doing it for, other crypto projects and basically smartest guy I know to date about Dow's and I learned a lot and you're going to learn a lot. Stick with us. It's time for another R Crowd deal of the week. Right now you can join our crowd's investment in Intellact. According to the deal memo, Intelax's transportation innovation could save the airline industry $3 billion a year. Intellact uses machine learning to improve safety, recognize hazards and reduce delays. And they're

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today, and our guest today is trying to take them from being theoretical to being reality. So I'm very excited to welcome Aaron Wright to the program for his first appearance. He is the co-founder of a company called OpenLaw, which is going to rebrand to tribute

labs, and open law makes it easier to create legal arrangements that work with Ethereum, and one of those would be Dow's, I assume. Welcome to the program, Aaron. Hey, thanks so much for having me, Jason. You heard my brief introduction there. Dows have captured people's imagination, and you are one of those people, but you're also an attorney and a professor of the law. So you are trying to take what is, I think, largely theoretical, in some cases, hype, in some cases the promise of a brighter future, and then

turn it into reality, correct? Yeah, correct. So I'm a law professor at Kratosa Law School. I've spent quite a bit of time in the crypto ecosystem from starting in Bitcoin in 2011, played a role helping to launch Ethereum, co-authored a book, looking at blockchain law and policy, and we're really bringing to life a lot of the concepts that have animated many folks in the Ethereum community from the beginning, most notably DAUS. Okay, so DOS for those people who don't know, stand for decentralized, autonomous organizations. So if we break down those three words, decentralized, they don't exist in one place under one authority, I think would be the best description of that.

Autonomous, they work automatically according to some preset rules. And there are an organization, which means there's, I would think, many people in them, but would you don't specify how many in it? Is that an accurate description of what these are? And how would you describe them to a person who doesn't know what they are but understands startups and business and why they should exist? Yeah. So I think that that's the broad mantle, right?

How do we create organizations that are more decentralized, have more people that are involved, are more automated and potentially over time completely autonomous, and are organizations that pull together capital, pull together resources, pull together people? they can do things more productively. The notion and concept around Daz has kicked around the crypto community for quite some time, starting with Bitcoin. In 2013, Dan Larimer, who put together a blockchain project called EOS, began to conceptualize what a decentralized autonomous corporation would look like.

So thinking about using tools that are available on blockchain technology, things like smart contracts and other kind of techniques and approaches to begin to automate aspects of how a corporation would operate. And the Ethereum ecosystem really generalized that concept. around the notion of a Dow, which is thinking about not just corporations, but all forms of organizations and potential organizations that are a bit flatter, less hierarchical in nature. And I think that's the core insight is that due to the efficiency that blockchain technology presents in terms of transferring assets, pulling together assets, collectively managing assets,

and the ability to use blockchain technology to vote or record votes, sum up votes, and take action based on those votes, you can begin to imagine organization. that are flatter. They don't necessarily have a board of directors, a CEO, the general partner, or some, you know, predefined centralized management, but can still take actions together.

And that's kind of the, I think one of the most interesting things about that does. So we're taking out the board of directors, we're taking out the management team, and we're replacing it with voting by anonymous folks. How is that better? Some people might look at that and say, this sounds a little bit chaotic. It sounds like there's no repercussions.

And didn't we, and you studied the law and teach it, didn't we add the law to create for good purpose? And we added corporate governance for a good purpose, which is there should be stewards and there should be people who are fiduciaries for the shareholders and are basically watching the store. What we're describing here with Dow's, I guess, is maybe taking that out or chivalers. changing it in a way. So maybe you could comment on that. Yeah, I mean, I don't think it's necessarily needs to be anonymous folks that are pulling together capital. Through the company that

I co-founded Tribute Labs, we've now supported nine different DAOs. There's about $200 plus million worth of ether that's been contributed to them. They've done a lot of different activity, which I hope we get to dive into in more detail. And everybody that's joined these DAOs has gone through compliance checks. They're accredited. They've gone through KYC. So they may operate inside the Dow by a pseudonym, but they're known at least to a party if there's any compliance or any regulatory or other issues that come up. There's other Dow experiments, which are a little bit more free-flowing that are focused more on managing smart contract-based systems, particularly in the DeFi ecosystem. There, it's not anonymous, right? It's synonymous. There's always an address tied to

some token balance, which is used for voting. But I, you know, I don't think you need to whittle away all the lessons of governance that we've learned over the past several hundred years when it comes to managing organizations. Instead, what we're really exploring is whether or not we can evolve beyond expert-driven organizations. Due to the efficiencies that are presented by blockchain technology, can different groups of people scattered all across the, all across the globe, work together to make decisions that are as good, if not better than these expert-driven organizations that we've had up until this point in time. And the answer seems to be, and there's still a lot of evidence that needs to be collected, time is still going to need to test these.

The answer seems to be, yes, right? These types of flatter organizations can make decisions, they can move quick, can filter information, they can perform due diligence if it's focused on investments. And they can begin to make an impact in a way similar, if not better, to some of these more traditional organizations and structures. And I think the best evidence of that or perhaps the best case you could build for that would be, well, if we have a hundred units of, uh, in a Dow, let's call them, uh, you know, um, there's a hundred Ethereum or eth in a, in a Dow, uh, you put in 40 of them and then 60 other people put in two each. I'm sorry, 30 other people put in two each. You would have 40% of the vote. The other 60,

30 people combined would have 60%. Your vote should matter more because you have more skin in the game. That is one of the core tenants here, is it not? Yeah, exactly. You know, for the tasks that we put together, it operates similar to that. It's all prorata based on your ether or contribution in ether. It's not weighted towards heavy ownership, such as like 40%. The maximum amount that any one party could own is less than 10%. It's 9%. But in reality, it's usually 1 to 2%. People participate in these structures in general individually. So that means their skin is in the game, right? Their incentives are aligned. there's not kind of this layer of GPLPs where the general partner doesn't have skin in the game.

So they're making decisions with their own capital. And they're working together not just with a handful of people, but with a whole disparate group of people from across the internet who are deep in on a particular topic. And that's where I think the magic kind of happens. We are living in an era, particularly in crypto, where it's very, very hard to stay up to speed with all the opportunities, with all the different teams, all the different potential. directions in which the ecosystem can go, and having a small group of people, let's say, one or two general partners really steering that ship is not working. You need to actually band together to kind of sift through the information that we're seeing get created and all the opportunities that are manifesting, particularly when it comes to Web3 and Crypto.

So this brings up an interesting point. We have the LLC structure in America, a limited liability corporation, and that has been copied around the world, I believe. I think it may have had its origins in England, correct? Wyoming. Yeah, so it's a U.S. invention. One of the many of the... Oh, it is a U.S. Inventions, yep, exactly.

Great. So, with LLCs, you can do many different things. You could run a law firm, an accounting firm, a recruiter, you could buy a piece of art and share ownership in it. You could create a venture capital fund. So when we say Dow's or we say LLCs, what we're really saying is like a platform to conduct business and have some rule set? Would we agree on that? Yeah, somewhat. So, you know, if you're pulling together capital and trying to make a profit and there's no legal structure

applied to it in the U.S. by default, you're likely going to be considered a general partnership. General partnerships are kind of the OG of organizations. They're amazing in many ways, because they come by default. Lots of states, depending on where the partnership is organized, has slightly different rules, but they're largely standardized. LLCs, provide additional benefits. You can register with a specific state and receive limitation of liability, which is critically important. I know you've spoken to lots of startups that you've worked with about the importance of limited liability for investors and for the teams, but what it enables you to do is limit the risk associated with the commercial activity. LCs in the U.S.

are hyper, hyper-flexible. They're really creatures of contract. And so you have a lot of latitude, a lot like an engineer has when they open up, you know, their editor and they want a program to kind of structure and put together different structures. So Dow's today, some are free form, right? There's no legal structure with it. Lots of early crypto-oGs are going to say that that's the way to do it. But at some point, those projects could face an issue and that could create liability for members or folks with deep pockets in those organizations. The DAWS that we support actually are rooted in a USLC. And we've put together different. a different operating agreement in different structures to make sure that they can comply with

U.S. law and manage the risks that we think are sensible. So our approach is a lot like Coinbase, right? We think that DAO's are a big category. We think that they're going to transform the world, just like we've seen other digital asset and crypto-based projects and initiatives do that. And we're really pushing to do that in a way that's responsible and can make sure that they can continue to grow and flourish here in the U.S. if you don't have business insurance, you failed one of the first steps in being a great entrepreneur. Startups should look no further than a broker in getting great insurance that will protect you and your team and your vision and your investors and your board members. Here's how in broker works.

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Okay, thanks, in broker. Great job. I think what's great about your analogy is you can't open up a window and program an LLC, you can get on the phone with an attorney and have them program it through the law. But what we're really talking about here is taking what's worked in LLCs for hundreds of years

and basically making it programmable, which is super exciting and making it global. And then instead of having the execution occur through good faith, which is how I would say LLC's kind of run today with the law as a backstop to bad behavior, these have the law built into them in certain cases, am I correct? Yeah, so it's both. So, you know, in our DAs, we call them rap DAWs. They are anchored in a U.S. legal entity.

Those entities are organized in Delaware. That provides the legal protection. So if something goes sideways, if there's a risk, if somebody needs to go into court, then you actually know what you're dealing with, you know, and lawyers and judges and juries can kind of begin to comprehend that. At the same time, you can put in extra protections through smart contract-based systems. So you can put in controls to make sure that nobody runs away with the capital. You can begin to program different ways in which the pooled assets can be managed by this collective group without having to necessarily rely on a centralized administrator for all those functions. And that's really beneficial, right?

That means that different people from around the globe that may not know or trust one another. They may know each other just from Twitter. they may have met each other at a couple conferences. They may never have met anybody before. They have a little bit more trust that if they pull together their capital, it's not going to get stolen in some sort of way. And that opens up a whole new vector for people to work together in ways that are different, right? You don't have to be located in the same small sliver of California and New York or another major city.

You know, you could be sitting in Ohio. You could be sitting in Bali. You could be sitting in South Africa. and you can all work together towards this common vision and purpose. So one analogy we've liked to use for DAWs is in many ways they're a lot like a subreddit or a message board but with a bank account. So you develop relationships that are personal. You can chat about something you're passionate about,

but instead of just limiting it to a chat or conversation, you can begin to deploy capital against that too. And that I think is pretty interesting. And that I think is the direction where we're going to see more and more organizations continue to move towards. So this is super fascinating. If you think about the formation of capital here in the United States through venture capital or something I'm a have a speciality in, which is syndicates, being the first one on Angel List and having the largest one in the world at the syndicate, we send an email. I pick a company.

People decide if they want to invest. They pick the amount. They send it. We do a bunch of paperwork around it. There's $25,000 in costs maybe by the end of the day, maybe 15 to 25, you know, wiring fees, etc. If you create a Dow, everybody puts their money in. And then when a decision comes up, like, should we sell our shares? So we buy into a company, let's say it's Uber, Masayoshi-san offers to buy Uber shares.

If my Uber shares, in this analogy, were in a Dow, and we had 100 members, each one owned 1%. The membership could vote. Do we want to sell half of our Uber shares to Masayoshi-San? Or we could do another arrangement, maybe how many? If we assume that we had to act collectively, we could do some sort of other rule like, hey, what is the max and the minimum you would like to sell? And then we come up with some weighted average.

But we would have to have organized that decision, because this is a decision that does happen in venture capital, when to distribute shares, when to take advantage of secondary. You rely on a general partner like myself or Sequoia with their new fund. They will decide when they distribute their shares in Square, was the example. Ruluff Bofa was using. on a recent podcast. Do they do them at the IPO price at $15 or $20? Do they do it at $70 or they do it at $200?

They have to make that decision. The LPs are trusting them. In this case, the LPs would just make their own decision, correct? Or for our DAs, everything is managed by the members, right? So that includes all investment decisions. That includes any distributions. So for the LOW, which was the first out that we set up, it's more focused on supporting projects.

It has about $70 million worth of ether that's been contributed to it. Wow. It's back to 100 plus projects. A number of them have turned out to become quite successful. It's called Lao, L-A-O? L-A-O, yeah. What does this stand for? So the Dow was the original kind of Dow experiment in the Ethereum ecosystem,

so we just did a riff on it because we anchored the Dow in a limited liability company. Oh, very nice. And people can read about that at the-L-A-O.io is the website for it. So you set this up when? So we set this up about 18 months ago. It came in first come, first serve. People contributed 120 ETH at the time, which was about, I think about $50,000. ETH has obviously run up quite a bit in price.

And all decisions are made collectively. And so we've had some of those decisions like should we sell certain tokens or assets that we receive based on investments and distributions, you know, have been made. But what's nice about thinking about blockchain technology, those are decisions members can make. and the execution aspect can occur automatically via different smart contract-based systems. So it's a lot more efficient to handle some of these administrative-type roles where the members themselves can manage their own capital, the members themselves can manage lots of these administrative tasks

without the intermediation that lawyers or fund administrators or general partners currently provide. And so the function of a general partner in the venture space would be to find deals, vet them, meet with the founders, maybe even due diligence on them, then present them to the partnership, which would then vote on, you know, deploying LP Capital.

In the Lao, who finds the ideas and presents them, where do they present them, and who does the due diligence? Yeah, so there's currently, I think, 68 members of the Lao. So the deals come from all different sources. The folks that are members of the Lao

have been part of the Ethereum ecosystem, pretty much from the beginning, So major founders of significant projects, protocols, folks that have been deep in the space since 2011, 2012. So they just have an instinctive feel for the direction of the ecosystem. They have a lot of relationships already with a number of the projects and teams. And so if they hear about a funding opportunity, they'll present it to the group that's discussed. Where do they present it on Zoom or in a Discord? Both, yeah.

So they present it in Discord. So different channels are kind of created to talk. about the opportunity to talk about the team. There's oftentimes some soft polling that occurs through Discord to see if there's rough consensus just around a particular project. There's two biweekly calls where people can tune in. It's voluntary where they can chat about the different deals or opportunities. And then actions taken.

Somebody can put up a governance proposal to fund the project. It opens up a seven-day window to vote yes or no on whether or not to back it. if more people say yes, then no. So instead of quorum-based voting, it's consensus-based voting, then the capital's committed. And to kind of soften the blow of whether or not you disagree with how this group is operating, you have the right to leave at any point in time what Ethereum developers have called to rage quitting. So you can just basically walk away with any undeployed capital or you can sell your interest

at the member's approval to a third party or to another member. And so this has worked really well. Have many people rage quit? So we haven't had anybody rage quit in the Lao yet. We had some people or one person rage quit in Related Dow Flamingo Dow, which is an NFT-focused Dow that was incubated by the Lao right at the beginning when it started. So it hasn't been something that's been exercised that much. But I do think the ability to walk away with your capital, a very, very strong redemption right,

which is one way to think about it, is really important. And it kind of keeps everybody in check. It's a great vote of no confidence. If somebody wants to do something that is, which a member considered unethical or stupid or inadvisable, they can say, wow, what am I doing with this group? It would be like being a member. And they're like, yeah, we have this incredible golf course.

We're not going to, you know, take care of it. It's like, well, why am I a member of this golf club? If you're not going to take care of the Greens, I'm out and give me my money back. And you can't leave that kind of membership, nor can you leave eventually. fund. If you try to leave a venture fund, you lose your principal in it. So it's quite punitive to leave those. So in this, you don't have that issue. There seems to be a lot of, in my experience, infrastructure to running an investment club. And I actually call the syndicate.com that I run an investment club. There, you need to have customer support. You need to host these meetings. You

need to do deal sourcing. So you have given that out to the folks in the Dow. But there's still some amount of operations that will be needed, I would think, over time. How does that get paid for? You have fees in a venture structure, and those fees trickle down to create a support staff. Somebody can pick up the phone. Somebody can do research on a tax issue or a legal issue. You know, like if one of your projects that you backed tried to screw you, how do you then know that they're trying to screw you or the Lao or the Flamingo? and how do you take legal action or, you know, who manages all that? In other words, how is it staffed? Yeah.

So each one of the DAOs has enlisted my company at Tribute Labs as a service provider, and we fill in a lot of these gaps. So we've handled everything from the legal structuring to the maintenance of the DAAP, to community support. We kind of joke that we're like a mod on a subreddit or a whip in Congress where we can help people focus their activities or if a vote needs to be taken. We can prepare certain information to press that forward. And then we handle tax and compliance.

So all those areas in between what you're describing, which is just the core decision making that we want the members to do and should be doing, we increasingly take care of that and we take a 2% annual fee. There's some variation on that depending on the doubt, but that's generally what we're focused on. No carry, which I think is important because the members are making their own decisions. and we don't have any investment related authority. It's all up to the members.

So we're really like the support. We joke that we're like a, our dows are a little bit like a reverse mullet. And we handle all the business and operations. You guys have the party. Yeah. So the folks in the front can have the party. Exactly.

So 2% of 70 million is 1.4 million. So every year that you run that you get 1.4 million. What do you do for that 1.4 million? That seems like a big number. Yeah, so we provide the legal structuring. So we have the structure for the Lao, Flamingo, Neptune, a digital fashion dhow called Red Dow. We also have a internet stable. Yes, we've taken our fake internet money to build a fake internet stable.

And we also have a Metaverse Dow. So there's about nine DAOs right now that we support. What do you do for that $1.4 million? That seems like a big number to me. in venture, the 2% that you get as fees is for sourcing the deals, diligent the deals, going on the boards and managing. You don't do that function. So it's a big number.

What does the Dow get for $1.4 million aside from the legal structure? So they get the legal structuring. They also get the tooling. So we're able to pull together what we call a tap. You can view it like an online portal where governance and other decision-making can occur. We provide the community support, which does take a bit. bit of work, you know, just to keep people focused and push things along. So those two things, let's double click on both those. So in a way, you're like Amazon Web Services

or Salesforce, like a SaaS provider of the management software where the rules are written, where the votes are taken. That is actually super valuable. Exactly. And we've been building out advanced doubt tooling to make this all a lot more efficient. So right now, you know, crypto is still early, right? We're probably past the first inning, but I don't think we've seen the full ball game yet. There's a lot of work. that needs to be done in the DAO side to lower costs to increase operation. But what we've seen across the nine DAOs is the types of problems that we think that these online groups are going to face.

And so since we see those problems, we can begin to solve them and then push that down into a coherent tech stack. So you can view what we're supporting as a broader network. Instead of being a network of blogs or network of different media properties, it's really a network of these Dow-like structures or DAO structures that all have the same or similar legal structuring, same text act. It's completely vertically integrated. So what you're learning in Flamingo might inform the Lao, might inform the next one.

That makes total sense. And then double-clicking on the community function, you host that week, those bi-weekly calls. You inform members, send them email updates of what's going on. You prepare tax documents and statements for them around all this. So in a way, you're like Angelus, Carta, or Shore, which provides LLC services for folks. Right. And software. Exactly. So it's like that. And then there's areas in which our DAs are expanding. So Flamingo Dow is a great example. It was really the first substantive vehicle to explore

NFTs collecting. So it launched October of last year. As an example, it's like the number three holder of Cryptopunks, got in well before this upswing. And that was incubated by members of the Lao. So through this hive mine, this collection of folks that we've assembled, they saw the NFT opportunities, I think, before most traditional venture capital funds and even, you know, emerging crypto funds and we're able to get in earlier than that. But that's expanding beyond even kind of things like collecting or supporting projects. They're beginning to work with artists and doing drops in a more collaborative way. So there's additional technology and tooling that's needed for it. So lots of these different functions we're able to support as these organizations

continue to grow. They're pretty organic. in terms of their general nature. Since you're doing them as a wrapped Dow, these wrapped DAOs, are they limited to accredited investors then here in the United States because of the accreditation laws? So, yeah, we have. The answer as to whether they need to be is still an open question. So we've gone through kind of a bifurcated analysis. We're, you know, in the abundance of caution, a little bit like how I think Circle approaches

things. We want to take the most conservative approach that we can. Sounds wise. We've limited it to accredit investors and everybody goes through a KYC in compliance related check. And that's another reason why having a service like Tribute Labs is important, right? If there's a change in the regulatory landscape, if there's more requirements that need to be handled, we'll be able to handle that and kind of mutualize the cost across the entire network, which we think is important. So yes, 99 members for now. And then everybody is accredited. But people are, you know, stretched out across the globe, which I think is pretty, pretty interesting.

So you're following the LLC rules of 99 members or $10 million cap with 250, I think, is the current LLC structures for investing in startups. Well, there's a couple different exceptions. So we rely in kind of the 99 member instead of the 250 member $10,000. Yeah. So that's a limitation. How about the open-endedness or the closed-endedness of this? So when you form the Dow, there's a period in which people can join, but the only way to join after that is to buy somebody else out.

Is that correct? Yeah, it's either to purchase the interest from somebody else or the members have the ability to delete themselves. So what we've seen with the Lao and Flamingo, the members have decided to do that. And they've let in more folks. So in the Lao, there's 68 members. In Flamingo, there's about 70 members.

and periodically they let in new folks as part of that membership, usually at a higher price. Oh, wow. So they can command a higher price for them to join in, which means they make a little profit on new members joining. So they don't make a direct profit, but it kind of reprises their share. The unit, the value of each unit in the Dow. So as an example, for Flamingo, initially to join, it was 60 ether for 100,000 units. It looks like they're opening up new membership, and it's going to cost about 3,000 ether for the same 100,000 units. Got it.

And that would be commensurate with two things, the exclusivity of it, which people can decide if they see value in, but also the portfolio I would think has appreciated over some amount of time because they're probably still holding some eth and the NFTs might have gone up. Correct. Yeah. And then when you join as a new member, you enjoin the in the profits and or losses of the entire port. portfolio. So for many of these DAOs, they're not really viewed as kind of pass-through entities. Instead, at least the DAOs we support, they're really viewed as, you know, in for the long run. And so joining our DAWS, whether it's the Lao when you're looking for kind of exposure more at the project level or Flamingo, which is looking for exposure at the NFT level, you kind of get to join a pretty well-vetted portfolio of either NFTs or projects or whatever other types of investment opportunities. our DAWS provide. Okay, so the Genesis Dow, which was created back in 2016, created quite a broula. A bunch of Ethereum were stolen. Somebody hacked the smart contract.

Tell us a little bit about what was learned from that case and then how you're protecting against what people, I think, reasonably have a fear of, which is like these smart contracts are run automatically. Can they be hacked? you know, we've had a big, long discussion, you know, would Bitcoin eventually be hacked? Could it be hacked? It's been pretty bell to last so far. But we did have Solana go down for some period of time. It is possible for things to get hacked,

as we saw with the Genesis Dow. So maybe you could explain to the audience what happened with the Genesis Dow and then what the community learned and then how that informs what you're doing going forward. Yeah, absolutely. So the The theorem ecosystem has been completely fascinated with DAOs pretty much from the beginning. Shortly after Ethereum launched, the first kind of Dow experiment was hatched, and that was called the Dow. It was initially aiming to pull together about $500,000 worth of ether to begin to support projects. It collected about $150 million worth of ether, which today would be worth tens of billions of dollars. And the concept was have the community identify projects that are worthy of being supported, have them built in

an open source way, and hopefully, you know, not just use digital assets like we see in the Bitcoin ecosystem, hold, you know, hold those assets, but put them productive deployment in some capacity. Unfortunately, the smart contract-based system underpinning the Dow itself was compromised, and a tremendous amount of the underlying ether was drained by a hacker, attacker, robber. There's different ways people want to characterize it. Clearly a bad actor at a minimum. Yeah, completely, probably a bad actor. I think people have still been trying to identify this person or a group of persons that was responsible for it. And it led to a big conversation inside the Ethereum ecosystem and ultimately a hard fork of Ethereum.

So they could roll back the changes. Yeah. Exactly. But since that time, we've learned a lot about smart contracts. It's very hard to build smart contracts. It's a lot like programming hardware. So it's difficult. It takes a lot of work and expertise.

But there's been a lot of development. instance, that initial experiment. And the smart contract base system that we use, which is called Mollick v2, or the newer smart contract base system that we developed, which is the Tribute Dow framework aims to solve a number of those problems. Time will tell whether or not they're perfectly secure, just like time will tell if Bitcoin's perfectly secure, there's always going to be some security risks. But so far, it looks like we've been able to address it. The second issue that the Dow itself brought up was just regulatory issues. So what are the interest? us in these in these DAOs are they going to be classified as securities or commodities.

The SEC did weigh in on that one. They issued a 21A report. So a non-binding report, nobody went to prison or got in trouble or got fined based on the Dow, but they kind of weighed in as as to what they thought those tokens would be classified as. And the answer there, since there was some folks that were in charge of it, since there was somebody that was effectively a general partner, they classified those interests as securities.

And so what we've done in the DAAS we support is try to shore up the smart contract pieces. And then also we've eliminated the general partner. And we think have opened up different ways to hopefully argue that the interest themselves are not securities in our DAWS too. What would they be if not securities? They'd be partnership interest or more like commodities. Got it. So I have a partnership interest and it's not a security. What's the difference for the members in those two?

I think the difference is, and this is what we're going to responsibly push towards, is that you can have hopefully tradable interests in these DAOs. So instead of having all of your liquidity locked up, if there's some return, you can begin to have tradable interests in these vehicles as well. And that could be great for valuation purposes or assessing valuation. It could be great for liquidity for folks that provide capital. So people could sell their interest to each other, like you could sell a mutual fund or a secondary market for venture capital funds,

which doesn't happen all that often. Right, but instead on open, liquid, blockchain-based marketplaces. So instead of just private marketplaces, but public marketplaces. So I think there's a lot of work that we need to do to get to that point, but that's the direction I think we collectively would like to go.

Okay, so something is going on in Wyoming. There was this American crypto Fed Dow, and maybe you could explain to us what's going on in Wyoming. Yeah, sure. So Wyoming, and I was part of this process, they extended out the Wyoming LLC Act to recognize a subcategory of LLCs called a Dow. What it did was flip some of the default rules when you set up an LLC just to make it easier to have these online groups organize that are relying on smart contractor code-based systems. It looks like Wyoming weighed in on a Dow that was formed and found the interest in some of those DAO's or potential. the interest in some of those DAOs to be securities.

And that's not surprising, right? Just because you call yourself a DAO, it doesn't mean that the law magically evaporates. It's going to really be fact-specific and case-specific and structure-specific to know what's going on there. What if the removal of the GP, it's hard not for me to take personally as a GP, but GPs do have value in the ecosystem.

Is it possible to create a DAO because I'm having you on because I keep getting contacted for the past couple of years about creating a J-coin, Jason coin that would in some way track my angel investing or doing a Dow around the syndicate, etc. To give people access to investing in startups or the secondary market in startups, real world, private companies. And so I've been looking at it and toying with it. In that case, people would want my access to startups, which is a very hard thing to establish. and obviously for me to go do a DAO would mean taking away my revenue stream of the GP carry.

So is it possible? It seems like it would be to create a DAO with a GP or a series of GPs who got carry if the members bought into that. And then it would create this ability to have the maybe voting for other things like liquidations. Yeah, I mean, you could definitely do it. You can have a J-coin. there's nothing really limiting that outside of whether or not the J-coin itself would be transferable or tradable. I think that that's the real issue. When you have a general partner, the law is fairly clear, right?

That person has access to information. That person, you know, has access to capital and to prevent the general partner from hurting the LPs. You know, we have securities laws in place to do that. And that's entirely sensible. So the question is, if you are actually still running the show, and still making those decisions, it's hard for me to see at least how you could have a freely tradable jacoin without some sort of shift in the way that the securities laws are interpreted.

I do think what is special about these DAOs is actually the elimination of that centralized group of general partners. I think you get a better flow of information. You're kind of combining lots of different networks of all the members together. They're able to kind of source and provide deal flow, they're able to collectively perform due diligence, which is important. And I think they're actually able to provide a bunch of different perspectives to know that you may be making the right decision about something. So if you wanted to go in that direction, Jason, it was super fascinating. I just would, you would have to think about how to eliminate yourself in part from that mix,

right? I think that that's when you'd really see the magic. Well, yes and no. You know, I will say when I look at some equity crowd funding where the wisdom of the crowd invest in companies, I've seen companies that the venture community passed on because they have more experience and they were able to vet those, but then the crowd invested in them. When we look at SPACs,

you might have the crowd get very excited about Enikaela, but anybody in Silicon Valley who had domain expertise wouldn't have done it. So if you, in fact, have the wisdom of the crowd with people who are smart and have domain expertise, which you clearly do in Flamingo and in the Lao, yes, it makes sense. in general startup investing, sometimes people think, well, Nicola looks like, it sounds like Tesla,

so therefore I'll invest in it. So, you know, it's, it really is an interesting question. I'm fascinated by the entire concept, especially on a global basis. And I think there are some functions that the audience could do. Like I do think diligence. We in our syndicate will often have people as but one example, we had, you know, people who are doctors, MDs, and we had a medical investment and they were able to give us feedback on that. We had people who worked at Disney in a company that was a SaaS company targeting movie studios like Disney, Marvel, Star Wars, Pixar. And so, wow, that was an incredible, you know, confluence of, you know, diligence and being able to sell into those companies. So we do see that. It's just on a micro scale.

What legal changes or clarity do you need to see or do you wish that you had from the SEC or other organizations to make this grow faster and more fluidly and, you know, let's face it, democratize a bit of, you know, getting into alternative investing. Yeah, I mean, I do think this question as to what the boundaries will be for interest in DAO's is something that we need additional clarity with. My sense is that- Explain what that means for somebody who's unaware. Yeah, so the question is, if you have an interest in a DAO, what is it?

Is it a security or is it something else? So the whole point of securities laws is to address information asymmetries. Somebody is, you're providing money to somebody that's in charge. And that person is in charge to build a company or a project. That person's in charge because they want to, you know, generate a return for you. So reasonably, at least in the U.S., many other parts of the globe, we say, hey, you should provide disclosures. You should be a public in some sort of way. Or, hey, this is too risky for everyday retail folks to be a part of it.

I don't necessarily personally agree with all the boundaries on the limitations here. And I know the SEC is actively working to kind of expand that, but I don't think they've expanded it fast enough, at least in my opinion. The accreditation law is referring to you. Yeah, exactly. But here, you know, you potentially with Dow's have a different scenario. Everything is transparent. You have equal access to that information.

You can walk away with your money at any point in time. You have the ability to participate in decision making at your choice. sounds like more of a partnership. Exactly. So if it looks more like a partnership, then why should we have this important, but sometimes overly complex regulatory apparatus of the securities industry applied to it? And I think when you do that, you get a couple benefits, right? One is you can begin to see broader groups of folks that are putting in their own capital

in order to make investment decisions. They're in charge of it. With the smart contract-based systems, you know that they're unlikely to have that rob from them because you could put in those controls. And then beyond that, I think it solves some problems that we see for venture capital funds or other forms of funds, which is just not gaining access to or the ability to actually have liquidity on those positions as well. So instead of just having paper gains in a venture capital fund, you could actually have tradable interest in that something that looks like a venture capital fund. Maybe that would

solve some of the late stage valuation problems that we've seen with companies like we work and others, right? Where in later stages of venture, you start to see that the valuations kind of decouple from what the public markets would support. Because even venture capitalists get exuberant, right? Well, I mean, we, you're racing for deals. And then also, there is a bit of a dance that occurs. You know, you have to submit to an audit. And then the auditors will look, you might have a company that's done phenomenal. And they just haven't raised money in three years. Their valuation three years ago was 10% of what it is now. Now the secondary market is trading it, but auditors might say, you know what, we don't want to rely on the secondary price of those shares in Uber or DoorDash or whatever private company, Coinbase.

So we're going to go with that old one. So now the fund looks like it's underperforming, then the company is public, and then you get this huge jump and you're like, oh, okay. So if venture funds could be traded in real time, you would have a bunch of people maybe getting nervous during the portion of the J curve where you basically have invested the dollars and there's no return. it's maybe even gone down because you had company shut down. Then as companies emerge as winners, you would get, you know, some reward and you'd then be able to trade at a higher price, your partnership value. And it has come up. You know, I do, I have been approached previously by people Aaron who have said, hey,

this venture fund is shutting down or, you know, winding down. Would you like to buy an interest in it? And here's what they hold. Here's the par value of those shares. Here's what this LP is offering it at. And you have to wonder, like, if you're an LP or an accredited investor, why do you want to get out of this? You know, it could be like a life event, but generally if it's a, you know, a major LP, why would they do that? What does the question?

Yeah. What does it question? I think what's interesting there is, you know, many ways you have either an expert if it's a GPLP structure, right, that has been presumably doing their diligence. Or you have kind of this collective group that may be larger that's able, it seems like, to make comparable if not better decisions. consumers are less likely to get hurt in those scenarios. There's obviously always the possibility for a fraud or a bad actor, but in general, you would think that this should be a reasonably safe bet

if somebody wants to deploy capital or their own investment on the retail side. So I do think that this is an area that's a sub-context for Dow's, is how do we have vehicles that actually have tradable interest to solve some of the problems that we've seen in venture, in head funds, you know, in other kind of fund-like structures. and I think that's important. And what we're pressing towards really is how do we evolve something that's actually better than the traditional GP-LP structure that we have in venture?

How do we produce something that can actually have a better return than what we've seen in some of the amazing funds or fun-like structures that we've seen over the past 20 years? And the early evidence is we're kind of there, you know? Like the collective decision... You also your evidence is in the craziest business. boom in any equity since tulips. So and dot com socks. So I would wait till the tide goes out and then see exactly what you've proven.

It would be my best advice. That would be like me, you know, judging myself just on the Uber or Robin Hood investment. Like, it's been a hell of a run for crypto the last 18 months. How much does it cost to set up a doubt today? If I wanted to set one up with you, is it $100,000? Is it a million dollars? Is there a set up fee?

We have the 2% fee per year. Or do you just do them when you want to do? them. Yeah, so we actually do it. The members of our existing DAOs decide what future DAOs we set up. So it's much more like a curated network. But we, yeah, we think that makes sense just so we actually have like a pretty strong signal that this is the right opportunity. This is like the right area to focus our resources. We're not as convinced that an open platform will work as well. Again, we're aspiring to kind of have, you know, the top performing kind of vehicles that are out there, not just, you know, another open platform like Angelus, which is amazing. Well, even Angelist was by invitation for turning on people's syndicates in the beginning.

So they may have opened up a little bit later. But yes, you definitely want to curate this a bit. Yeah. Yeah. So, but in terms of the raw costs, I mean, we've automated all the legal setup. So that costs us nothing outside of the filing fees. the major cost is just deploying the smart contracts. That's usually about $400, $500, $500, depending on the price of ether at any point in time.

Yeah, so it's super streamlined and that I think is pretty amazing. Joining the DAOs, once it's set up and you've gone through compliance, it's just a couple clicks. All the paperwork gets automatically generated. We opened up a Metaverse Dow. I think that was last week. So it's about a $20 million vehicle. It took 40 minutes from end to end to open and close.

So you can pull capital incredibly fast on incredible. crypto and it's a pretty good use case for it. Yeah. That's unbelievable. But there's a minimum to join most of these. What is a general minimum to get in on these? Yeah, it's usually about 60Eth. So current pricing, that's about $300,000. Got it. So that would be like being an LP and a venture fund, which typically starts at 250 or 500K is the minimum check. So amazing. Well, this has been a great conversation. You are the most qualified person I've had on discussing Dow's. It is still early days, but thank you so much for sharing so much with us. I know Kevin Rose is part of the Flamingo Dow. He's talked about it a bit on his program and continued success. I'm really fascinated

by the space. And just on the issue of accredited investors, I think we both share, you know, that this should be more equitable and more democratized and more fair because you have all these amazing ways to own equity in high-performing assets. And we're limiting it. to people who are doing offshore betting or an offshore accounts and, you know, buying crypto. But really, it should be like licensing. You can drive an experiment. You could drive a motorcycle. You can fly experimental planes and you can buy guns, all with a license.

A private company stock is not available to be purchased by a license or participating in these kind of DAOs. Why not create a licensing and a certification? So, so easy. Right now you're Ethereum-based. What about Solana? You've been thinking about that and all the hype around Solana? So we definitely are not wedded to any one blockchain. The underlying smart contract-based systems are written for Ethereum.

So if we wanted to do something on another chain, we'd have to kind of rewrite it and go through a similar security-related review. There's efforts on Solana to make it compatible with Ethereum. They say that's like EVM compatible. It's still early days there. I think with a lot of the new layer ones or layer two is depending on how you're kind of classifying it, it's a little unclear if the hype is getting ahead of the technical achievements.

I think it's pretty clear it is. I mean, there's eight people working on. No dicta salanna. There's eight people working on a full time. Like, I mean, these things are going to take time. And we have a lot of people who want to place bets and many more people placing bets than building. That's, you know.

Yeah. So, you know, and for us. there are people building on Ethereum. That's where the core innovation is. That's where the developer ecosystem is. That's where we're seeing the most interesting things. So we're dedicating our time there. But if another blockchain-based ecosystem wants to go in that direction,

we'd obviously be open to exploring that. Yeah, obviously, it's like asking you if you were on, you know, Google's Cloud or Azure or AWS if you wanted to try the next one coming out. And it's like, well, of course, I'll try another one. You're indifferent. If there's another platform that works better, cheaper, faster, you would embrace it, of course. I mean, that is part of the promise of this as we wrap here,

is that these things are going to be able to be set up and up and running globally. And if you're doing $70 million ones today, $20 million ones today in 40 minutes, it's possible a $10 billion dollar Dow to, you know, sure, to get rid of, you know, some global crisis. We didn't even talk about Dow's for nonprofits or, you know, we're saving the rainforests, but many things could be created. If you said, hey, we're going to create a Dow to buy, you know, land and make it not developed just to preserve wetlands or Amazon or, you know, Middle of America, whatever.

You can might be able to set that up, but if it catches fire, all of a sudden you've got $10 billion to buy, you know, land in the world and everybody just votes on it in the Dow. I mean, the possibilities here are truly inspiring. Yeah, completely, you know, and those are the types of DAs that I think you'll start to see coming from our network. We've been thinking about, you know, land-based DAW. There's other projects that are doing that too, you know, tying it. Once you tie kind of the internet to a legal entity, it really opens up a lot of potential.

And I think that that's the headline, right? The headline is we're moving beyond an era where people get together just to chat with one another or post or get to know each other via social media. but now we're arming them with a bank account where they can take collective action. And that's really encouraging. If you believe this thesis that most people are generally good people, and that's just something I believe. And you enable them to work together, provide them the tools to do that. Then you can start to see the internet not just be used, you know, for conversation,

but actually for collective action. And that could be to make a profit. If it's focused on investments, that could be to help with all these charitable causes like you were describing before. Yeah, make an impact. Yeah, and make an impact. But that's great, right? If we can imagine this world where there's, you know, people from around the globe that are passionate about a topic that can now make an impact together.

I mean, that is, I think, one of the fully expressed versions of what I think many of us have wanted for the Internet from the beginning. Amazing. Thanks, Aaron Wright, for coming on the program. You can follow Aaron on the Twitter, A-W-R-I-G-H-O-1. And you can visit openlaw.io. you can visit FlamingoDAO.xY-Z or the Laolao.l-a-o. And I don't know, do you have a new distribute labs, have a domain name now? You can check out tributaO.com to see a Dow framework and the rebrand is coming in the next couple weeks.

Oh, fantastic. All right. Thanks so much for coming on the program. We'll see you all next time. Bye-bye.