GP A Pragmatists Guide To Governance

Transcript

foreign [Music] ation on the Pod today we've got Simone and Malcolm Collins who are co-authors of the book the pragmatist's guide to governance from high school clicks to boards to family offices and Nations a guide to optimizing governance models which is a Wall Street Journal number one bestseller really excited about this topic because Dows are hard if we're going to build a more regenerative crypto economic Internet it's about decentralizing power and you can't do that without governance and just learning about what can we learn from high school clicks and boards and family offices about the the composite parts of governance is a really exciting thing to

me as we all have these Dows now that are sometimes worth millions or or billions of dollars and there's a lot at stake in governance what can we learn about this pragmatist guide to governance and how can we apply it in Dallas so um on the Pod we have Simone Collins who's worked in VC private Equity cyber security and online content she is an author and runs the pragmatist Foundation in and then Malcolm Collins her co-author who got his MBA at Stanford and is a successful entrepreneur and author they have written the book The pragmatist guide to governance and they are the guests on this episode and this episode is co-hosted by two members of get coindao so as a reminder I'm a co-founder of Bitcoin but I've since disaffiliated

from leadership in order to create more space for upcoming leaders inside of Bitcoin down into decentralized Power also to decentralize stress and um so Kyle and Kevin have a lot more pragmatic experience with Dow governance than I did that's why I asked them to co-gu guest co-host this episode with me so Kyle Weiss is the executive director at the get coin foundation and also get coin dial Steward Kevin Olson is head of engineering for get coin dial and also a Donald Steward and so on this episode Kyle and Olson pretty much drive the episode I take a back seat while they guest co-host and we talk about the nitty-gritty of Dow governance what can we learn from the pragmatist guide to governance so if you are a government

Governor nerd I've learned that's a thing recently if you're a governored and you're using governance to build more regenerative crypto economic systems then this episode is for you I think that you're really going to enjoy this uh the this content Kevin Olsen and Kyle and other people that get coindal had read this book and recommended it to me at East Denver this year and it's just really chock full of a lot of pragmatic information about governance which which I appreciate so I think that you're going to appreciate it too enjoy Valley Dao is an open Global Collective working to finance and democratize the governance of synthetic biology Technologies to protect the future of our planet research and progress into synthetic biology is critically constrained by the world of nation-state

regulations and bureaucracy from middlemen but the potential that synthetic biology has for the world is massive it can produce a world in total harmony with nature we can grow stuff using cells like software it's awesome and the best part is we no longer have to pull carbon out of the ground to grow and maintain civilization don't you think we should be funding this Valley Dow does and that's what they're here to do to try and make the solar Punk World of Tomorrow a reality today so join Valley Dao right now and save the planet at valleydow.bio hi everyone how's it going hello how's it going I'm really excited to to be talking about the pragmatist guide to governance I uh I think I'm gonna do a lateral pass over to Kyle Weiss who has more

experience with Dow governance than I do so Kyle you want to ask the first question yeah cool thanks thanks Kevin for having us and um thanks Simona Malcolm too for joining and kind of sitting in the hot seat here um one of the first questions I think that we would love to just kind of tee up is like what is governance how do you think about governance after all of this research and writing like was some of the the common form that you might put despite the different types of governance systems that exist that help the readers get on the same page of what we're even kind of talking about here malcol would you like me to take a crack yeah he's going to give a way better definition um but I'm gonna attempt to summarize his Collective knowledge

um we would probably argue that governance is the intentional design the overlay that you would put on top of basically the dominance hierarchy that everything else devolves into if you don't intervene so I I love that definition but I would say if you want to like make it a broader definition governance is any system whereby multiple people interact towards a common goal or just interact in any way governance is just how groups of humans interact and governance can be bad or good so we're talking about bad governance it's how five people working together turn into the work of two people or three people but good

governance is often have five people working together turns into the work of of 10 people or 12 people of course there's other measures of quality of governments like Fidelity of vision over time and stuff like that but the core thing that Simone touched on which I think is so important is that humans have sort of an evolved default governance system and so often when we're thinking about governance we only think about really intentionally designed systems and we don't think about these organically appearing system of governances which you see whenever a group of five people get together and say let's go eat lunch somewhere and all of a sudden you are making all of these subconscious calculations in your head like okay if I say something and people

don't agree with me does that lower my position in the dominance hierarchy therefore am I not going to make my position known or X person just said something and I don't really like that but then if I say something and people don't agree with me does that lower the way so we can talk about how this like evolved on as hierarchy works but the the core thing that Simone said is all governance systems are fighting against us and this is a big problem when you get groups of people together like in a senate or in Congress and they start devolving into this monkey pattern for making decisions yeah yeah totally based on where their Super PAC is or perhaps who like the whip leader is and whatever else like whoever you're sort of appeasing um I really appreciate that and so you know at the broadest level it's how

groups of humans interact um and hopefully that level of coordination brings out um Amplified outcomes perhaps like in the analogy of the five of work at two of that but like the coordinated work of five uh resulting in ten is obviously much much better for that um you know in in the particular book that you have you're you're talking about some of the governance systems that have um evolved or been present perhaps maybe present is a better term for the last 100 150 years just like in observations but like humans haven't fundamentally changed how they're coordinating right like sort of dominance and hierarchy some of these other things that you talk about are really prevalent

um Talk us through your perspective on just like where there's opportunity why you think that might be and like why some of these systems are so ingrained in the way that they are well so governance is an incredibly dangerous thing to change at the state level we try to change governance at this state level then you get it wrong hundreds of thousands of people or millions of people die like every single time um it is and not every single time but almost every single time so it's a very risky thing to experiment with and so when you see government experimentation happening it requires really really specific environmental conditions the last time we at a a sort of society

civilizational level had like big experimentation governance was the founding of the United States and then since then most democracies have basically taken like the US Constitution and made minor changes where they thought this could be better or this could be better but it was like this is the default template and so the question is is what allowed that to happen what allowed that to happen if you had a collection of different colonies in different city-states that were founded often with very different cultural backgrounds that were very utopianist um and that experimented with totally new governance systems but at the level of off in their cities their towns their parishes and then they combined all of these weird experimentation that had

been happening for like the 50 years prior with uh Native American government systems like a huge part of the US government was based on the Iroquois Confederation right um and so what you had for the first time was one the encountering of totally new governance systems that Europeans weren't familiar with and then the chance for utopian crazy people to experiment with a bunch of different governments in a low-cost method because you know if one of their settlements failed they just all starred to death which happened all the time um uh and and and so now what's cool is we are seeing these utopianist online communities experiment with governance again in a way that is leading to a new flourishing of governance ideas we

haven't seen in centuries but but the point that you made there that I think is so critical is people really haven't experienced with that many types of governances yeah cool thanks thanks for sharing um seems like a pretty risky business then uh to make changes if we know that large swaths of populations are just going to die um you know tying this back a little bit to the the world that we know more of is um you know web3 on chain governance systems whether through decentralized systems or some other kind of T communities or token voted waiting or like all sorts of other mechanisms feels like a really fantastic place to

experiment because people won't die if like we get it wrong they've financially might get rugged and like that always sucks none of us love getting rugged on some like hey we think this is going to be the next you know the cool thing about Dao's is they're not really governance experimentation they are experimentation with the medium upon which we are writing governance um it's like right right now governance has and has been since the beginning of human civilization really been written in laws in a in a legal system and then uh the only alternate system is like social contracts and then outside of that there may be like biological intuition like we talked about this like

evolved governance system but what Dows allow for and what web3 allows for is governance to be written in to software in a way that is separate from the laws and whenever you're writing on a new medium in the same way that if you're coding on a new medium or you are uh painting on a new medium it allows for things that previously were unrealistic to be experimented with so through writing on a new medium um you can experiment with types of governance that no one could theoretically experiment with in the past yeah that's cool um Kevin Olsen I know I've been yeah commandeering a lot of the conversation

so far um do you want to oh that's some of these things that's great Segway I really appreciate that I think um where my head's going with this one right it's like you know so the government systems that we have currently right web3 right it's all those kind of token weighted voting uh a lot of people kind of accuse it of being sort of this plutocratic it's probably inspired more from sort of like this sort of like like analogy to shareholders voting or something like this is probably where most of that kind of comes from it kind of makes sense right we're all kind of controlling a treasury or something um but one of the things we've often aspired to especially Bitcoin is kind of one human one vote getting more just like kind of a direct democracy as opposed to sort of like let the whales

decide how things should go and that's kind of behind quadratic funding and quadratic voting and some of the stuff that we care about but you have this moment in the book that kind of blew my mind we were talking about uh voting systems and this is maybe going like right into the weeds I hope that's okay uh and they were talking about how like actually like direct democracy and one person one voting systems are maybe bad ideas and are actually pretty rare and I wanted to kind of just get you put put that out there like what what is your thinking behind that so this is a really cool concept and I really love it because I think as a species we have this drive towards fairness and we've had this since our eight days there's this great video you can watch of a capuchin monkey and it's getting

cucumbers as a reward for a task and it is please just punch and then it sees the monkey next to it get grapes in reward for the same task and it just loses its mind um and so we have this sub logical I think drive towards fairness and this is where this idea that one person one vote comes from to a large extent but when we think about what governance systems especially governance systems that aren't state level government systems are supposed to do they are typically created with a goal that goal could be maximized productivity maximize output maximize shareholder value maximize quality of life of people living under this system everything like that and then there's this thesis that giving

everyone equal say will maximize those things but there isn't like a truest connection that you would have between those things I mean theoretically actually it should be the most talented people within any governance system that are making decisions um uh most talented at solving that outcome so like suppose the governance system's goal is to like maximize utilitarian happiness within its governing structure well then presumably you'd want like people who would train their entire lives to be these like utilitarian maximizers or something like that and you were like Geniuses and they were doing it right but the problem with this is that these people become corrupted every time I mean the core reason we have the one person one vote

is to try to prevent this type of corruption but then that becomes more pointed then the question becomes well how do we maintain some sort of competent the centralization of decision making around competent actors that does not become corrupted and that is and then and then centralization around competent actors that motivates competent actors to invest mental time effort and energy into the governance system right um and then all this gets interesting but then you have this whole other layer today which I think is like the next iteration of governance that I'm so excited to see where it goes which is AI

governance and what that is what I mean is you could have a governance system like we were working with um perhaps it's like other people who are thinking about starting you know state level governances right and one of the things we talked about is well what if you had an AI sort of Senator that represented the collective children of that state but it was trained constantly on everything children had written that year as homework assignments as policy pieces as sort of position pieces and so it would not only represent sort of the collected ID of the student body but it would motivate students to write more and engage more with their educational process because the more content that they produced the more impact they would have on the opinions of this AI that was

representing them um so there's all sorts of different ways you can move outside of one person one vote and I can go deeper on this if you want or not I would just add one thing that I think focusing on votes themselves um is is not the right thing to be looking at what you need to be looking at is what people bring to the table and what their incentives are and it's about aligning talent and incentives in a way that produces an optimal outcome votes are just some weird tool like there's no inherently good or bad vote it's it's about incentives and contributions amazing that's so great because I think we often walk around with these ideas like you're saying this is like almost like hardwired fairness thing and like straight flat direct democracy I think

we just like kind of assume that going forward is like a thing we should aspire to and we're like oh man if we if we could just like I don't know like defend our Network against civils we could then have this utopic one person one vote thing and then you're you this blew my mind because you're just like yeah I might not want that so thank you for writing that into retail I definitely think that was a that was that was a deeper chapter but I really appreciated the the level you went into that um so uh maybe like just moving a bit beyond just voting because voting is sort of like okay everyone has a stay they all have a stake in it and there will be systems of voting probably in our doubt for certainly and other doubts for some period going forward we don't

have ai who can quite understand the the values and thoughts of our whole Community just yet maybe in six months but but for now we have to keep things moving but you're talking about also like others other substructures right and kind of like the sort of the concept of sort of checks and balances and this was one that like I know Kyle and I talked a lot about and sort of like trying to set up sort of these opposing forces within uh a governance system I wonder if like maybe you could kind of open up on on that one a little bit you talk about your family office and I thought that was a great uh chapter but like how do you go into that design space because I mean I love kind of the examples you gave but like what's the process for Designing the rules of a

game oh I love this okay okay you've got me so excited okay so the coolest thing about governance systems and one of the things that you're really losing was one vote one person systems is that you can reward various Behavior patterns with control within a governance system and that's the beauty of governance systems this ability to reward and through rewarding um uh encourage certain Behavior patterns so when you're talking about family offices the thing that I always say so you know you often get rich people and what they end up doing like they they think well I'll give more control to like I'll give equal control to all my kids which then just motivates their kids to have as many kids as possible because then they can't outvote

the other family factions or they'll say well okay I see that could happen I don't want that to happen so what I'll do is I'll like split control based on how many kids they have and I'll differentially put people on family office boards depending on how much they contribute to charity and then what you do is you sort of create this setup where a person doesn't get either dedicate their lives to family politics or go out in in the real world less competent people who can't make money in the real world and so you end up with incompetent people differentially running the family office so then you could ask questions so like let's say we're designing a family office how might this work well you don't want just one system so you probably want to triumvirate so the

system that we use for family office is to say well what we want to motivate a few things we want to motivate competent people who are invested in the long-term outcomes of the family to have more say so one branch of the governance body that votes on sort of a representative they gain voting power based on the amount of money they invest into the family office similar to like shares but you could have like shares decreases the family office gets bigger or something like that but you could also uh say that they can never withdraw their shares so it's not like a company right where their vested interest is in growing their stake of that company and they can remove that stake it's more just that they're showing how dedicated they are and how competent they are within the real world and then they gain power

based on that then another faction is like okay we want to make sure they have a vested stake in the future of the family office so it's how many kids they have or how many people we brought into the family office because I've always hated the idea of the family office being like a genetic thing that I don't know that feels off to me like anyone should be able to join of their value aligned and then the final Branch was what if we had a branch that was meant to solve what we call the NASA problem which is you can get political parties that swing too quickly between the things and so you can have long-term like moon mission projects right because those have to last between administrations so what if you had one branch that was just like past president it's right just past people who used to

manage the entire family office and then they voted on a person and then these three people would vote a triumvirate that would then choose like a dictator um and the idea I think a good governance system centralizes power to one person who's responsible for things but can easily and dynamically remove that person from power and that person being in power doesn't like consolidate them with additional power long term but whatever this gets interesting endows is you can say okay well you have different voting bodies you could give them different types of tokens so you could have one token which is associated with how much money you have put into this sort of Dao system right but then another token which is based on like how

much you have contributed to the code or within online forums or within Community like basically Whoopi like your social status within the community as voted was community members of the amount of contributing and then you could do okay so the one that's like the woofie token right that's that's sort of like social status this Branch proposes bills and then the the investment Branch they can then veto the proposed bills right um but then you could organically change the power of the investing Branch had based on uh like so so this is how you motivate Behavior remember what I said so suppose like less people are investing in the company right now right and you're like well then we want to

increase the governance power of the investor tokens right so you would have the investor tokens increase in value uh voting wise so like you needed a lower percentage to veto something as value in real like USD or whatever was going down um so you could organically adapt when you have different parts of the governance system that have different tokens associated with them to the demand for that type of token in the moment to ensure that people are always motivated to do do whatever isn't currently motivating people um maybe I can jump in that's okay I love this because you answered one of

the questions I had as you were teeing this up which is well what does a path to like Progressive decentralization look like right like outlining the weight of token voting or perhaps the types of things that you can vote on varies if you're a brand new downwind you're just launching and there's some like core founding team that wants to make sure that you're not just going to rug to treasury versus five years from now and you are you know highly decentralized highly effective perhaps even exploring some sort of sub-dial model I don't want those five stodgy old people like still ruling this thing with an iron fist like so how do we sort of build those systems and so I'm curious you know outside of the USD value in token waiting like do you have other thoughts on what a couple of those

mechanisms might be of like Progressive decentralization I think something to always keep in mind is that the people who are running those five stodgy old men it will never be their opinion that they should be taken out of power and so when they are creating the initial Dao mechanisms they almost always will leave loopholes in place or ways in place where if in their mind some upstart whippersnapper who disagrees with him has taken over or like the mob has taken over and kicked them out that they can then exert their control to prevent sort of the system from spiraling out of control because in their mindset when they're founding the Dao what they're

thinking is is well the only reason people would take me out of power non-voluntarily right that I wouldn't voluntarily be stepping out of power if something had gone wrong because to an extent whenever we create a new governance system we are always creating it to extend our will into the future or our current will into the future like we even if that will is like Progressive voting ideals or whatever right like we have some idea but what we forget is that we change over time right and our will can change over time and so I think the the key most important thing that I would say is make sure the mechanisms of the system that you initially create actually allows the power to be taken from you

um if other people decide it should be taken from you and uh that can often mean the the best way to do that is through the quick and organic appointment of new dictators and by new dictators what I mean is like another Council of five men or something like that right like how can the system actually do that because if you have a centralized source of authority like these five old men and then a decentralized source of authority like just people voting right it's very hard for a decentralized authority to take control from a centralized Authority however if you create mechanisms that allow the center the decentralized source of authority to um you know like the Spartans did when

they would go to war they would elect this uh sort of dictator uh right to go to war for them to elect short-term dictators to uh allow the decentralized force to take power from the centralized Force yeah fascinating cool my head is sort of spinning on all the different mechanism designs that we'd want to explore like different ways to do this um primarily on chain right like that's where so much of the spaces legitimacy comes from and I'm rather timely example is perhaps what's going on in another tower all the token holders are voting to move the treasury and to do different things and those the type of foundation are just like nah we're not going to do that like sorry Dao and everyone's sort

of like well wait what the hell like what's even happening I'm like why are we even here so it's it's been interesting to watch but to figure out how to encode that on chain like you described earlier like putting it in the software so that that doesn't become an option to follow token holders will but instead something that's sort of ingrained well so the question is is how do you push people right so there's a few levers that can get people to obey you right um these five study old men you could create a system where they lose a lot of money like basically they lose a lot of tokens if people vote a certain way um so basically even if you have because this is one of the things like they can still decide well I want to maintain power I still have tokens like at the

end of the day if I keep pushing I'm eventually going to regain control of the system right um they just voted to kick me out and put someone else in but I'm going to keep acting like I have power so how do you actually really threaten this person if you had a system where the masses could vote away someone else's tokens ah well then how they have to obey the masses so the question is how can you create these other sorts of systems that genuinely threaten people with a lot of Social and institutional power in a doubt so um I think in a similar vein thinking about how to avoid some of the bureaucracy like the checks and balances is really important and it's a thing that that Kevin talked about like we've really been focused on for some of Bitcoin here is like building both

accountability models but then checks and balances on power between our token holders and like those that are leading work streams in our Dao and you know the the foundation the type of role that like the foundation plays and um one of the things that we've observed actually early on in our Dow's existence is what you described as like the cancer problem this expectation where as these organizations mature and as they grow their purpose becomes justifying their purpose and their purpose isn't actually um you said this so elegantly in the book let me see if I can find the quote here um they're they're spending more time proving their utility instead of actually providing utility I thought that was very elegant um I'm curious like you go on very

quickly from that concept and talk about different frames how do you stem that like do you just have to cut out the tumor and like sorry you're out or what sort of suggestions might you have and helping make sure that people can buck that Trend instead of just proving they're actually back to providing value so this is a really cool problem because it is such a systemic I guess you call it a wicked problem in governance Theory um which is to say imagine you have a city council right and every year that Council creates like New York right five departments that are meant to like look at something to do with roads right like meant to fix potholes in this area or whatever normally and this is why we call the counselor problem you know your

body is constantly creating cells to do specific things and normally those cells like die at the end of their function or they're killed or they're gotten rid of right um but uh in this case suppose you've done this for 20 years in just one year one of them doesn't decide to die and this is why it's a cancer problem because it's almost sort of an evolutionary problem so long as you are creating some governance bodies within your governance eventually one of them is going to decide to not shut itself down and differentially you know it is those ones that continue to exist into the future and then these things that have continued to exist fortunately most governance systems have sort of some level of immune system that's meant to deal with these you know that's meant to you know regularly scan for

inefficiencies regularly scan for stuff like that you know to find these and then kill them and so the way that once something has begun to drift from from its original purpose and now it's just like I survived because I survived it needs to look like it is doing something really important but actually more than doing something really important it often survives the ones that become the biggest problems survive because they are doing something unquestionable and by unquestionable what I mean is that they are the thing preventing racism in your organization so if you then look at them and say yeah a lot of the stuff you're doing seems really inefficient I don't know if it's like data driven I don't know if it's like actually really increasing

diversity I mean how dare you question us now we know you're one of the racists and now our organization can get rid of you because we have purged the organization of you right so the question is how do you deal with things like this because they're they're they will always appear if a governance has been around long enough you will always get some level of self-replication and like a cancer like when a cancerous tumor grows it it tells the body to send extra blood flow to it because it can use that extra blood flow to better signal how important it is to better make sure everyone does do little questionnaires so that they know how important this one department is um and the real key is unfortunately the key to a lot of things which is to occasionally have like once every 10

years or something like that or once every five years or once every year depending on how you do things have a sort of system where a council is elected uh Council of five people of three people something like that um and that this Council it then just essentially scanning your entire organization uh governance Organization for areas of inefficiency and then deleting any area of inefficiency within the system um and uh it won't be perfect and they may sometimes delete something that actually was important and then the hope is is that your governance system is adaptable enough to recreate that thing after it's been deleted in a way that is hopefully not uh recreated with this entire bureaucracy so what you would

likely also want to put into in place is some sort of rule that once something is deleted by one of these councils a new like uh sub organization can't be created you with the same governance members um because you know presumably then just the same organization could re-pop into power so how do you prevent that from happening um and it's a really interesting problem because it's always going to create a fight right like and and when you're talking about a state level governance you'll get huge populations that rely on stuff like this for their income right um and I could go deep into how this works and why it becomes such a problem but I don't want to go too deep for the purposes of this conversation yeah no this this is fantastic especially in like in our space where

you know the Vibes matter like no one wants to to call someone out onto the carpet and just like your work is terrible and like you haven't delivered these things and so a lot of this conversation happens perhaps in one-on-one conversations or behind closed doors yeah oh I just had a really cool idea okay so this is a way that a Dao can do something that no other governance system could do so one of the things that Dao's allow is voting to never know the answer so what you could have the Dow do is people vote and a person or small group is elected to sort of go through the organization and delete the the cancers

but they are completely Anonymous and No One Ever Knows who was elected to be on this Council so right now when you want to prevent um a long-term sort of ideological corruption the way governments often do that it's like the Supreme Court solution which is to say okay well make this a lifelong appointment but another way to do it is to make it incredibly short-term appointment but to make it a completely Anonymous appointment that would be cool that's super fascinating yeah yeah and um I don't know perhaps the fourth person is elected as like the the spokesperson like Don't Kill the Messenger this is just the elected messenger and you don't ever know if they're a part of that third you know

the three people who are on the council or not or if they're the ones that just had that information given to them um I think it's this as you point out this is certainly a problem is any sort of governance system continues to evolve and so we will continue to explore it and I think it's why we've seen very large prominent now it's just totally acts entire groups departments teams that we're working on is it's like when the only action we usually have it's like stop funding like that's the one thing token voting you get no more no more sort of resources in this like cut that off so we've also got to remember the power of sortition so um I I think you know we talk about one person one vote being the ideal governance system but I actually think in many ways the

true Ferris government system and often a better governance system in many ways is partition so for people who aren't aware what sortition is that means that you have a council selected or a small a group of people selected or even one ruler selected randomly from Lots it's basically a random Lottery the the area where you see certification most commonly is in our supreme court system right now um because you know that's that's it like randomly not Supreme Court sorry lower court system so when you are chosen for jury duty that's partition you are Joe you know chosen for and certification is really good because what it means is once you're selected as part of the searchition group one you are truly an independent actor right like you are truly an independent voter

but you also know your vote really really really matters so you pay a lot of attention to the decisions you're making and hopefully you take the time to educate yourself on that specific subject so you could also use a veto Council for the people who are deleting certain governance bodies within an organization that are completely sortation based but also secret so you could have it go through a few layers of secrets so you have sort of the secret level people who are tagging organizations like we might need to get rid of this governance body but then the veto vote on that could be decided by certification and there's different ways you could do certification it could be a one-person Warren Vote or it could be like a one investment one vote or like a one post one vote so people are more likely to be chosen from this pool of of

tokens depending on how frequently they interact with the project with additional tokens being put into the for them for each interaction so then that's a combination between like weighted voting answer tissue yeah fascinating um I'm gonna go through and re-listen to this conversation like me multiple times and see what types of ways we can like tease these things out um this is definitely jam-packed of just really interesting and novel ideas I I appreciate it um I'm gonna I'm gonna jump us I think just so we have so many topics I'm like uh I feel like that Willy Wonka quote uh where he's like they're so there's so little to do and so much time and it's like wait reverse that um

in this particular instance you talk a lot about large governing structures just inevitably lead to inefficiencies and I think all of us feel that right like the DMB the number of these sort of government institutions were like the bigger they get the worse they often get one of the potential solutions that you talk about is this concept of like miniarchism and I think I'm pronouncing that correct and for everyone on the listeners here the expectation with many artism is that like as an organization gets larger or a group or a team or Department gets larger whatever the the largest form is comes in and kind of like breaks that and we see that in the ethereum side the ethereum community um with this concept of like you know a lot of us talk about we don't want to

King make and if there are Kings in our ecosystem we want a throne break we want to make sure that anyone who is like the Sole Provider of this particular service that's not the case anymore and so we do a lot in sort of talking about pluralism talking about sort of diversity and approach and trying to make sure that that exists in the space um but one of the concepts that you talk about is like foreign actors coming in and how all of a sudden you know if I'm the US government and I'm going to use miniarchism and Throne break all of these other states well that doesn't mean a whole lot of China is just going to come in and give unlimited resources to whatever States is willing to sort of uh Advance their agenda I'm curious like drawing that back to the ethereum

ecosystem we do have like a pretty decent uh walled infinite Garden so to speak where there's such tribalism of like oh I'm gonna pledge to be on the Solana Network and pledge to be on the ethereum network folks are like way like those two like those are incongruent how could you do that I'm wondering like if there are other miniarchism ways in which we could help ensure that like folks don't grow unabattedly unabatedly in that regard um or just how you think about kind of like governance in ways that help limit some of those so this is such a fascinating question so there's two aspects of this question first I'm going to get out of the way the less

complicated but maybe more complicated aspect because it's really interesting people don't talk about it what is what do you do when someone has Consolidated Social Power um so even if they haven't Consolidated like actual governance power they may be such a leading figure in the community the sort of ideas begin to swirl around them and their opinion can lead the community down really crazy Pathways um and ancient Athens developed ostracization for this very concept whenever a politician became too popular they would vote to ostracize that politician and he basically had to go live in a different city for like 10 years and then he'd come back now I'm not saying that's a good idea but it is just something to be aware of when you're building a system do you have any

mechanisms in place that can basically diminish someone's Social Power if they develop too much Social Power just outside of the governance then the second question that we're talking about here is okay did okay two concepts here governance become less efficient as they become larger uh I'm gonna sort of ignore this and then talk about the second Point first and you can bring me back to that if you think it's interesting um so uh whenever you have a governance something that's really important in how you build that governance is whether or not sub governance is conformed under that governance and uh the power that those sub-governences can wield and so an example of this would be you could have a company right like okay so you could have the U.S state right that's one governance and then you could have companies under it that's another layer

of governance and the state might want to break up trust because one trust could become so big and so powerful that it ends up essentially controlling how the US government votes but then also under companies well then you can have other sub-governances like unions right which is a sub-governance of the employees so whatever a sub-governance gets so big within the larger governance it's it's sort of uh on top of it it can then sort of explode from it like a butterfly coming out of a cocoon or you could say like a caterpillar that's even out the inside like a wasp caterpillar is he not the inside of a butterfly caterpillar and then explodes out into like evil wasps however you want to see it a great example of this happening historically was uh uh the Catholic the Christian Church uh sort of growing

within uh the Roman Empire until one day it's the Christian Empire and it's no longer the Roman Empire because you allowed like one sub-governance to grow grow or grow until it's basically just the entire Empire and it's it's the emperor is now you know alongside this faction and this is something you're always going to see in government systems but the problem at the state levels and we're talking about nation states the thing you pointed out is suppose I bust Google right like I as a state I'm like I will always trust us all of the organizations that are growing within me within the problem you have as foreign actors can build giant search engines and because they're giant maybe they can get better and then they come in and they start competing in the U.S ecosystem and because they have all this money behind them right how do you

compete with this um and this is a big problem in a world where like your Googles actually are a huge Force for like foreign power projection um okay so you have all that how do you solve this in the ethereum ecosystem one one quick note on that if I can interrupt you there this actually there's a quote that you gave in here um which is fantastic uh talking about those economic systems so you can't teach an old an adult new tricks only systemic institutional rewards and peer pressure for ethical Behavior will motivate Behavior where it does not already exist that's that's like the at what point do you just let Google do that like you can't teach them like new tricks all you can do is sort of constrain the constrain the systems and

would take and operate in sort of the fundamental economic rewards that they have as well so that's really interesting and so with Google you get a big problem so we're just talking about in general so Google's what you call a natural monopoly and these sometimes occur in economic situations often with two-sided marketplaces I don't want to go into we actually at safer business school get a class taught by the head of uh bing um and they were so mad that like economic chemically it's nearly impossible to beat a company like Google in the search space and that you almost always get the major player being about 80 of that space and you see this with like eBay or like there's a few other Amazon is another example of a natural monopoly it's very very hard to break these because they just sort of economically sort themselves that way

um and so like ideally what you would want is uh money right like Capital to be a proxy for efficiency and productivity like theoretically that's how capitalism works but in a natural monopoly that's no longer how capitalism Works Google's just the biggest because they're the biggest not necessarily because they're the best or anything like that um and you're gonna get these natural monopolies forming under like an ethereum ecosystem but another question is the ethereum ecosystem is okay suppose some sub-governance system is growing within the ethereum ecosystem and ends up sort of wearing the ethereum ecosystem you also need to ask is that a bad thing right like a lot of people would say the fact that a union can end up essentially controlling a company might not be a bad thing where the

company is optimized around economic games the union is presumably optimized around some sort of utilitarian goal but unions are often very poorly designed and very easy to capture for people with nefarious means so they often end up just becoming like mob boss things but anyway um so take a step back I don't know I might have gone too too far no no no this this is fantastic I think that that question is there my observation has been it takes usually a leap in technology or approach to disrupt the Googles or the Amazons or whoever else right like what what got Amazon to where it was was its ability to like move online to ship things directly to people's store that had never been seen before even the

Walmart was like the behemoth at the particular time um we can discuss whether or not like chat GPT and open AI is going to be the one that sort of like breaks up Google's Monopoly and so much of like search and user interactions so coming up with these novel mechanisms since these approaches I think is like what you know hits that breakout trajectory so to speak with the sort of worked for as long as it has and one of the reasons why it's such a cool system is because governments intrinsically become less efficient the larger they get you can get a giant organization like Google that is genuinely unable to compete with a much smaller organization like openai um and that is is is specifically the

core value proposition of capitalism is that um it allows for smaller organizations to because they are more efficient outcompete larger organizations that presents this sort of power consolidation for happening to long intergenerationally and actually if you look at how long a company is on like the Fortune 500 list I think it's only like 20 years on average or something like that I don't remember but um so so the government large companies while we can all think of a few they actually have much less staying power than people would think um anyway I don't know where I was going no I think well um I I think they're still spot on because on the flip side to that too is the companies like open AI it takes a lot of freaking conviction to say no I'm

not going to sell out when Apple comes to me when Microsoft comes to me when Google comes to me and says we just want to buy you and absorb you into the mothership right like that path of like I Believe in a Thing and here's my payday here's my exit it's very different than like no I believe in this enough to fight you for the next 10 years because I think I'm gonna win with this technology um and so we see so many Acquisitions inside the space and all of this novel Tech just like where did that go like what yeah and this is why it's so dangerous when people are like let's just outlaw billionaires right the thing that keeps open AI fighting against Google is the potentiality of literally insane amounts of money because you to

take that risk to say oh yeah I'm gonna turn down like you know 2 150 million dollars 500 million dollars from Google today because one day I'll be king of the world I mean that is a thing that has to regularly happen it does for whatever insane reason I can't even imagine like the delusionality of these people who do this because I don't think I'd be able to to say I will beat you Google I'll turn down this immediate offer but yeah I mean it's a very interesting thing um and I'm sure there are better systems for doing this I'm just talking about the way the capitalist system works until we build a different system yeah cool all right so I'm gonna pull us

back to government instructors um this is just fascinating to think about like sort of the evolution of organization design too throughout this um so coming back a little bit one of the thesis that I think we all sort of know and recognize that we touched on very briefly was um this notion of like dominance hierarchies and like why they are so critical why they sort of evolved I think we can all think about like the alpha wolf in the wolf pack um these other particular pieces um whenever systems you know aren't intentionally designed you see more of this like dominance hierarchy where that just kind of naturally forms with the few exceptions in nature as well and so

I'm wondering for those even that are forming Dows even that are sort of working inside of the web 3 space it's almost always like this amazing NXT Creator this amazing luminary who's launching this particular thing like how do you preempt that early on like what are the types of things that you would look for if we want to evaluate a project or a new data or something else that like does does this withstand the founder leaving or does this withstand like instead of it just you know turning into a dominance hierarchy like what are the types of things to think through and evaluation so it's really hard I I think one of the things that most to this bad founder effect and this this power consolidation effect is one vote one person because when you have one

vote one person sort of the wills of the masses matter much more than the wills of the competent hilariously used to see this in the old MySpace days when you go to someone's profile and they'd be like these are my favorite bands these are my favorite movies like what are you doing when you're saying that what you're doing is you are projecting to other people an aspect of who you are through the works of someone else that are a common point of social reference um and this is what you need to do when you're doing many-to-many Communications because you can't you know you've got to think about okay what's my role within this ecosystem and everything like that um so often the best way to prevent this is to allow for a system to elevate specific other people to positions of

power and I think that that's the biggest thing is this system just completely decentralized if it is then it's almost always going to lead to sort of this uh deity like figure right or does this system allow for power consolidation occasionally where specific other people can be brought into Power um and and and check this power of the other person and then we have a new answer to this in the modern because like dictatorships there are short-term dictatorships they're almost always our solution to things like I hate to say it like they're incredibly effective um and I don't mean like at the state level you don't want like a a dictator that can stay in control but what you want is specific people who are empowered to make changes or specific small groups of

people but I think with AI that gets even more interesting because I think a really interesting Dao or a really interesting new project and the way we should think about things going forwards is that the human and the AI should always be interchangeable I should be able to elect a specific human to make a decision or to vote on my behalf or something or a specific pre-programmed AI model to vote on my behalf or something right like so I should be able to elect either Biden or chat gpt4 to be president um right you know and I think that once we enter sort of this AI World it gets really really interesting in how decisions are made and the way people

are building AIS because then you will have different AI models competing against each other in elections yeah interesting um I I really appreciate the idea that like electing your next dictator likely needs to come from some cohort of of trust or like that's like the inner circle of I'm not just going to go on the street and pick the guy off of the streets and be like run my household for me or my family office in that example that you give in your book as well um but I think the evolution of AI is going to be really fascinating thinking through perhaps I feed all of my governance forums I feed it all of like my Twitter spaces I feed it all of like the interactions that are happening in these spaces to see if it can discern

what the true sort of Will and sentiment is of my community um and then you know turn that into it's a policy for us as well so another idea I just had so what you could do and I've never seen anyone do this is associate the dictatorship with collateral so that when a person takes a position of power within a system so like suppose you're consolidating power with a single person to make some decision within the organization they have to put down like I don't know X percent of their own wealth into the organization and then they get that back at the end of the period if the community thinks they did a good job and so what this does is it forces like one somebody is only going to put themselves up for this role if

they are willing to potentially take that hit but then two it makes the individual incredibly conscious of the wills of the masses while still having the personal ability to consolidate power in the organization and I think this might also prevent sort of these individuals who like a lot of people sort of swirl trust around but who sort of know themselves that they're not as competent as they're pretending to be and as soon as you're like you know put 10 of your personal wealth into this community and be aware that if you don't achieve the aims that you sort of said you would achieve during your campaign that money gets confiscated and redistributed to like the people who didn't vote for you or something like

that right like that's really fun yeah I could say that in cover and governance um like corporate settings so you're gonna stake a million USD in this particular instance and you get that back in stock or a governance token or some other sort of value and over the course of a year the five years however your election period is if if you do well and like if your profits are up in the corporate sense and like your shareholder is up and like you're growing that piece like you're getting some sort of Insider allocation at that time um but if you you know Crash and Burn and it goes horribly like you lose it all the team rugs you anyway and it's like well thanks for trying

um this could also be a great system for getting people out of the the so one of the biggest problems with any system like this or any sort of power consolidation is power transfer because people intrinsically don't want to transfer power so you could also make it so that the system doesn't give them back basically their deposit unless they leave and stop like commenting or interacting with the community for like a period of five years after their period of power consolidation so they can't uh you know create any sort of like uh corrupting influence yeah cool cool well I might try and pull this back I think into like almost a summary mode it feels like we have zigged and zagged across so many topics that have been

interesting some of which are very much uh web3 related um and some of which are just like human nature like just sort of ingrained in how we organize as individuals it's rather apt that we get to to chat on the coordination podcast with like a coordination crew so thank you again Mr owaki um I'm curious if you have any like kind of maybe not last parting words but ways that you would describe more resilient governance systems that you wish people inside of web3 were exploring um Dows are certainly one of them that we're aware of but like are there other either novel sort of governance systems that you wish there was more like if you were to hey listener like go take this action what might those be mentioned it

a few times here so I think there's two real types that I want to see more of one is Dows with multiple non-interchangeable or types of governance tokens or interchangeable on floating marketplaces types of gardens tokens that are earned through different types of actions and control different governance bodies with different functions i.e1 token gives you sort of executive voting power one token allows you to vote for Senate or something like that and you can and then these tokens could sort of organically change their power based on you know how something is doing the other thing I find really interesting is in any system where you have veto power in a dow uh you know I think you should have tokens automatically deactivate if they're not

used for a while so like suppose a investor class had like veto power was in the Dow you'd want the people who are just like sitting on their money to no longer count towards like a person when you're saying oh you need 90 consensus or something like that that'd be interesting but then the real thing the real thing I want to see this is the big next thing in governance is AI governance where a eyes are trained on the collective consciousness of the people participating in a governance system what does that look like what does it what does that allow like could you have a a senator group where every Senator is like collectively trained on like all of the web traffic coming from their state like within a dow obviously this would this would function a little

differently but I think that that is the the next great Frontier of governance theory is ai's because AIS allow you to train governance on people's thoughts as voting units in people's interactions as voting units instead of specifically sourced intention from people yeah kind of moving beyond surveying and and you know this kind of stuff and into just like just spew out your thoughts engage all this kind of content production that we've been seeing for quite some time now that just becomes the the fuel for this I love that that's great I do Wonder in that scenario how you

prevent you know even even like bitcoin's forums like from the governance perspective we have folks show up who show up who are like I'm gonna shout into the void like I'm gonna drop some huge filibuster post on like this large scale information and everyone's like okay like I don't know what to do with this I'm not even going to bother replying like what is this like you have to get super granular you can't just be like feeding all the information it's like no feed it the information from this trust level with this number of replies and that like okay otherwise you end up with like boat face as like yeah everything so this is what we call is it's a problem that exists across governance structures we call tyranny the unemployed

um and and what happens is that in a lot of governance systems they say okay we'll make this sort of one vote one person governance system anyone can participate but what they don't keep in mind is that people have multiple demands for their time and so the people who are going to be most differentially motivated to participate in your community versus any the other community or the people who have been rejected from the other communities this is the core problem with something like Reddit right like the the people who spend the vast majority of their time on Reddit are spending the vast majority of their time on Reddit because they don't have other friends they you know they they don't have or or they don't have a job right like if you are a super competent person and everybody wants to talk to

you and everybody wants you to be giving your advice all the time you're going to have tons of Demands on your time and you are not going to be able to hang out in the forums all day and communicate um and so then the problem is how do you or differentially vote on things like I could spend all day voting on these things so you could say okay well what you could do is you could weight content by how many other people voted on it right but that's hard to do right and this is at the end of the day why unfortunately economic contributor systems are so valuable um and by that what I mean is for someone to assign a competence values to someone else and this is as true when you're training an AI as as it is when you're giving out tokens for

contributors like if you've got a token for every post well that or you give out a token for every word or you give out a token for every vote right like you always end up with tyranny the unemployment um and so the question is well then how do you prevent that how do you have a system that actually is is incentivizing the people who other smart people think are smart and uh within our world today the truth is and like I hate to say this wealth differentially accumulates with people who are smarter um and so what that allows those people to do is if through investing in an ecosystem and like paying to upvote other people's content and stuff like that like say okay this content matters

and then you have the AI weight those upvotes when training itself then you say okay well then this system is differentially valuing actual competence the problem is is it's also differentially valuing money into interest and by that what I mean is that any society wealth has its own interest to some extent and I.E lower taxes right you know uh so it differentially values the interests of the wealthy class so how do you prevent that hold on I'm thinking I don't know we can talk about it in a future podcast yeah cool cool all right well uh perhaps to summarize I think you would love to see more Ai and corporations inside of governance in addition to just human

participation um I think that's an area that would be really really fun to explore in the future just as the tech continued to evolve do you know of any projects like doing anything like that either in the web free space or anywhere else yet no I'd really love to see that the state governance space where we've looked with some of these like new nation-state stuff that we've been involved in but no I'm not aware of anything so if any of your listeners are uh you know please reach out to me yeah cool cool and um I would love to take you up on the offer to perhaps go a little bit deeper on just Dow governance we've woven in some of that um now but I heard a rumor that you might have some thoughts on that you're trying to figure out how to disseminate

that information so um it could be really fun if if Milwaukee and the rest of the coordination would have us back yeah well I mean as you see when I'm talking to someone like you who's really smart in a subject like 25 of the stuff I said here was just new ideas I had because of the way that you framed questions so they're obviously very half-baked but I I love this sort of conversation because you know when you get competent people together uh you can get new ideas which which people who are more confident than us and and even like head down on this stuff and then hopefully runways um that they may not have had because they're too close to this like I'll admit firsthand like I am an idiot when it comes to Dallas compared to the people who actually work on Dust I'd love to talk more

yeah cool awesome Kyle thanks for uh just co-hosting Olsen same uh I think that this one of the things I really love to do is just the empirical knowledge that comes from people who are practicing things in the theoretical knowledge uh combining into a swirl of insight and inspiration and I really have enjoyed the book which we'll have a link to in the show notes and I've enjoyed this conversation and uh I think that we should do a part two about Dallas so we'd love to have you all back into it I would be so excited and the book's only 99 Cents for anyone who wants it by the way uh the the best 99 Cents that I think you could you could spend in a day or a month most likely so so while while

we're showing the book I'll just say that Olson and Kyle uh in February 2023 at Denver were raving about this book and saying it really helped frame a lot of their thinking about Dow governance and just governance in general um and so click the link in the show notes pick up the book and learn about practice guide to governance cool well thank you again Kevin for having us um and would love to set up set up another one in the future here thanks everyone foreign [Music]