The Ownership Economy

In the last two decades, the internet has created an eye-popping amount of wealth that for the most part has been captured by a few founders, early employees, and venture capital firms. While a large amount of consumer surplus in the form of free services and information has accrued to average consumers, actual ownership of the underlying networks is still very concentrated despite the fact these platforms are often built on user-generated content. Gains from the largest asset class, real estate, have also largely accrued to the wealthy. People are drawn to DAOs for their potential to lower the barriers to owning a piece of a growing pie, even if each slice is too expensive to afford on their own.

Smart consumers are realizing they can own a piece of the products they use and pay for instead of letting all the value accrue to professional investors. If you had the choice between using two similar apps but one let you own a small piece of it, you might be more loyal to the product where you had some skin in the game. This is one reason more startups than ever are doing community funding rounds where they raise money from their users. After all, one of the biggest criticisms of gig economy companies like Uber is that an astronomical amount of value is captured by founders and investors, yet the drivers doing the work make a paltry gig-dependent wage. It's not just corporate greed that prevents drivers in sharing in the upside, it's also the regulatory and legal systems the make it expensive and infeasible to grant stock to contractors. Recently, the SEC opened a trial period where gig economy companies could more easily issue stock to their workers. While that's a start, some envision a future where platforms like Uber are replaced by platforms entirely owned by their users. Smart contracts could fulfill rides and manage a review system without the need for e centralized company to provide a trust layer. One bold experiment, The Driver Cooperative, is a 100% driver-owned alternative to Uber that operates in New York City.

DAOs are bridging the owner-versus-worker divide by giving more people an opportunity to become owners. At VectorDAO, designers and developers work together on projects for clients and instead of just receiving cash, they also receive tokens backed by ownership of projects they work on. If one of those projects succeeds, they get some of the upside. VectorDAO claims to have attracted talent from the top 1% of designers and developers, which is unsurprising since they understand that best people have an ownership mindset and want to be paid like owners too.

You might be thinking that ownership is great, but do we really need a blockchain or DAOs? Indeed, there is a lot of progress to be made that doesn't even rely on blockchains like reforming rules that make it cumbersome to distribute stock or making it easier for the average person to invest in startups. And if you are crowdfunding a cabin in the woods with a few trusted friends, an LLC is probably best. You can trust everyone involved and you don't need to worry about your friend who volunteered to collect the funds and buy it running off with your money. But for large projects that need a lot of funding and where you might not know or trust everyone involved, a DAO allows you to operate at scale and collect contributions from thousands of people around the world while keeping the treasury safe from misuse. DAOs are a critical piece of the puzzle since they lower the friction to working with people and coordinating resources on a large scale, enabling more people to become owners and share in the fruits of their labor.