DAO Leadership Principles

My favorite book on leadership is Extreme Ownership by Jocko Willink. In my reading of it, three main ideas stick with me:

• Take ownership over everything. It is yourresponsibility for your team to achieve success.
• Even if you are low in the team’s nominal hierarchy, you still can lead up the chain of command with the same tactics you use when you are at the top.
• One of the most effective leadership tactics is decentralized command. The optimal leadership strategy is to cede as much authority as possible to other team members while still maintaining ownership over the outcome. In other words, give people authority up until the point that it jeopardizes the mission.

These ideas are surprisingly compatible with DAOs. In fact, I believe that DAOs amplify the effects of these tactics. Consider the following points:

1. Tokenization IS extreme ownership. Harnessed the right way, blockchains can turn contributors into genuine owners.
2. Decentralized Autonomous Organizations ARE decentralized. This fits really well with decentralized command.

So tactically speaking, how should leaders operate in a DAO setting?

Don’t argue. Build

Maybe you like Ethereum but they like Solana. Maybe you want to focus on building out a mailing list and they want to grow the Discord. It doesn’t matter. Build your vision, and if you come around to their plan, help them build it.

Why? Because as the number of people in the DAO increases, it will be increasingly difficult to align everyone. If a new person joining wants to build something on Solana, let them do it. It doesn’t hurt your efforts on Ethereum. It might not even be helpful at all, but it also doesn’t waste any of your time or resources—unless you spend time arguing with them.

They are spending their own time and resource iterating on improving the DAO. Think of this like a free, little DAO incubated startup. This type of experiment will follow a power law return distribution.

Don’t seek consensus

You will never convince everyone. Pitch people on your vision. Explain it well and answer questions. Most people will not believe in you. Out of the billions of people online, find your kindred spirits and work with them. As you gain success, more people will “magically” begin to find your vision compelling. If you need consensus in order to achieve your goal, you likely are being too ambitious. Work on something that you can do yourself and expand as you gain allies.

Why? As you begin to produce results, you quickly will set yourself apart. For example, someone who regularly writes blogs or launches an app is already in the top 1% of productive people online. On the other hand, gaining consensus is really hard. You don’t know much about the other people you are talking to online, so you don’t know what is convincing to them. They also don’t trust you, since they don’t know you either. Building is kind of like “proof of work”. By producing results, you are proving to them that you are an outlier and they should take you seriously.

Be prolific

Write a lot. Create content. Think out loud. Act transparently. Show your work. This way other people can find your content and plug into your efforts on their own time. You won’t need to individually convince them or bring them up to speed.

Why? The Internet is a leadership amplifier. If you are able to perform leadership through asynchronous content creation, it will scale to a very large number of people. The key to making this work is being prolific. You need to write everything that you would say, so people don’t need to ask you what you think—since those conversations won’t scale. You need to write so much that you have essentially “uploaded your consciousness” to the cloud (or blockchain).

When you write out your thoughts, computers are able to infinitely replicate and deliver them asynchronously to anyone in the world. This means two things are possible:

1. You can pitch anyone in the world on your vision without being online or doing any extra work.
2. You can collaborate with anyone in the worldwithout being online or doing any extra work.

As you gain distribution, this will become very powerful. But it even works on a small scale when collaborating with people across different timezones or different levels of availability.

Take people at their word, but don’t rely on them

If somebody says they will do something, take them at their word. If they say they will put together a proposal, assume they will do so. If they claim to be an expert coder, assume that is true. Traditional companies check if someone is qualified before allowing them to contribute. Don’t do this. Never gate keep participation based off of a pre-conceived notion of someone’s capacity or lack thereof.

However, you should also never take the future work product of others for granted. Don’t depend on others to accomplish your goals. Work on things that you can accomplish individually and build off of people’s previous work—not future work.

Why? People have immensely varying and unpredictable circumstances. Someone may be overly confident, but over time will gain skill and wisdom. Someone may be having a bad year, not delivering on promises initially—but later stepping up their game. Many geniuses are misunderstood for a long time.

But on the other hand, you cannot really trust people you meet online. You wouldn’t want to give any important passwords to a stranger on the Internet. You want give people as much authority as possible without making them responsible for anything you can’t afford to lose.

It is possible to build trust with people over time. Humans have a capacity to bond and rely upon each other. This will happen. But the number of people you trust will likely be less than 150. Whereas, you can interact and collaborate with many thousands of people online.

Think like an angel investor

When others are doing good work, bet on them like an angel investor would. Make many small bets on others that show potential, even if you don’t have the time to contribute labor to their efforts. If you don’t have financial means, invest your social capital into them: connections, recognition, introductions, promotion. Give people a chance and, as they demonstrate progress over time, add to your position.

Why? Angel investing is the most scalable form of helping startups. By deploying capital instead of labor, angels can help 10s, 100s, or even 1000s of startups over their career.

As mentioned earlier, early-stage investing returns follow a power law distribution. Most efforts that people make will lead nowhere, but successes will be massive.

Following this model allows you to add value to a large number of initiatives, even when you are unsure of the initiator’s true capacity. It also doesn’t block you from working toward your own goals simultaneously, since you aren’t committing significant amounts of time or labor for low-probability payoffs.

Aside from Extreme Ownership, another great leadership resource is Amazon’s Leadership Principles. A lot can be learned from the way Amazon operates its business. It is one of the best run businesses in the world and uses a lot of forward thinking tactics that can help enhance DAO operations. I will write more about this in the future.

In general, I derived these ideas from thinking about DAOs from first principles.

DAOs differ from companies. Companies operate with a small number of highly trusted, high-performance contributors. Whereas DAOs operate with a large number of untrusted, low-performance contributors. But what each DAO contributor lacks in individual capacity, the overall system makes up for in scale.

It’s like comparing a fast single-core computer to a super-computer made up of many slower nodes. For properly parallelized tasks, the super-computer will vastly outperform the single-core. For unparallelized tasks, though, the single-core will win.

That is why DAOs much change the architecture of how they work in order to realize their true potential.