An Exploration of Internet-Native Organizations

Forefront Journal publishes essays from the frontier of web3 social and tokenized communities. This is a guest essay from Scott Moore and Maxwell Kanter of Gitcoin.

Forefront Journal publishes essays from the frontier of web3 social and tokenized communities. This is a guest essay from Scott Moore and Maxwell Kanter of Gitcoin.

As we've all witnessed the explosion of internet-native organizations, most notably DAOs, over the last few years, many of us have naturally begun to ask: what is it we're all building here?

While this topic could fill a few books, we wanted to use this piece to lay the groundwork around community in DAOs before moving onto some more practical implications for how to organize them at the social layer.

With that in mind, we'll split this piece into the following sections:

1. On the origins of the community
2. Building internet-native communities
3. Future history of DAOs

To avoid reinventing the wheel, we'll be building off many ideas put forward by others and directly attributing prior work. We highly recommend you read the linked notes, to get the most out of this piece.

On the Origins of Online Community

At its most basic level, a community is just a group of people coming together, sharing space and forming bonds over time. These bonds are formed through shared meaning, rituals, and, eventually, collective memories. Said another way, great communities are built first and foremost through a deep, mutual sense of belonging.1

A Fractal View of Belonging by Richard Bartlett

Belonging is itself a fractal concept. Most communities start with a core group or squad, which itself ultimately emerges from the energetic, passionate people who engage in its formation and continued sustainability. At the risk of going too far, people start with the self and any such notion starts with our ability to internalize and act on behalf of a core identity, formed through our experiences in the world.2 In this way, every community is deeply personal, and we reflect our communities the same way they reflect us.

As Other Internet writes, squads have existed for literally thousands of years and are arguably the most personal kinds of social groups (e.g. friends on the playground). And today, in the post-pandemic era, squads are absolutely thriving. Even though we've all spent so much time physically distancing ourselves, these smaller groups have grown closer by having deeply resonant, emotional experiences with each other, and hence finding shared meaning, often entirely online. An important consequence of the close, hyper-personal nature of squads is that they have extremely tight boundaries and limited membership, curated by informal rules around a shared sense of connection and meaning (as some people call it, The VibeTM).

Dem Bois iterated on by Other Internet3

Internet-native squads have been on the rise since well before the pandemic, even just as evidenced by the tools we use (e.g. moving from the "Facebook wall" era of the 2010s towards a nascent / evolving collective "group chat" era in the 2020s).4 But on the internet today, social media is still where squads mostly tend to converge. On platforms like Twitter, which act as de facto online town squares, squads often come across each other's unique cultures and languages, and start to converge on new memetic narratives that allow for a kind of unintentional, collective world-building. The connections and lore that form between these squads lays the foundation for the communities and scenes we've become familiar with across the internet.5

The vibesTM function as the informal rules governing squads, and as squads evolve beyond their ✨ i m m a c u l a t e ✨ forms, they begin facing the challenge of whether and how to introduce previously unnecessary restrictions (e.g., who's in the chat).

First Gen Starter Pokemon by Unknown

Although squads don't have to ask the question of how to expand, it's a natural question that arises as they form networks and become interdependent. Through this networked evolution, squads risk losing many of their typical characteristics, and become a different creature with unique attributes. Often, this can result in growing pains as they find themselves navigating where to live on a spectrum from closed, orderly, and rigid to open, chaotic, and fluid.

Internet-native Squads

What squads gain by working through these tradeoffs and integrating into larger groups is, at its end point, the same benefit we all get by participating in society. By introducing structured agreements we can support each other's ambitions, benefit from the positive externalities our specific squads create, and ultimately work together towards grander visions for the future. By sacrificing familiarity, we can strive towards a greater purpose and find a deeper sense of meaning.

Scaling Internet-Native Organizations

Although we've talked about squads evolving in order to support the goal of creating larger, more resilient communities, we haven't explicitly asked: why do we even need to evolve beyond small, independent groups?

Fundamentally, squads get by on vibes because they have high trust and alignment. By spending so much time together and sharing experiences, squads are able to build empathy and see each other as full 3D humans. But as groups scale from 15, to 150, to even 15,000 members, per Dunbar's number, the vibes may not, as our ability to connect with each other, and in turn our ability to find alignment and solidarity, diminishes.

Without alignment, most organizations at scale either fall back into separate squads, or introduce structures (i.e. guardrails) that keep them moving in the same direction. Importantly, for the anarchists in the room, structure does not mean hierarchy, but it does mean collective organization. Any community that wants to find and act on a shared purpose requires one of these ways of keeping on track.

To better define our terms, alignment derives from informal consensus building while structure is generated by formal rulemaking. It's often said that alignment is stronger than structure in the sense that it builds from intrinsic motivation and energy rather than extrinsic interests. As Venkatesh outlines in his Online Governance Primer, if alignment gets too low, it's easy for people to stop following any guardrails that exist, and fall from Gaia (synergyTM) to a kind of Hobbesian world (chaos) that no one would want to stick around in very long.6

Four Online Governance Regimes by Venkatesh Rao

To scale DAOs then at the social layer, it's crucial for us to think about how to scale alignment as far as possible in order to achieve their shared purpose . But knowing that this won't last forever, it's equally important to build structures that take on the messy work of coordination and lower its cost over time.

DAOs as Stories -- Finding the Limits of Alignment

Revisiting the idea of lore, is an interesting way to see how we might increase the chances of finding alignment within groups as they scale.

Stories and lore have existed as long as humans have. Fundamentally, as a species, we exist through and within stories. Stories guide and ground us through all aspects of life. Our sense of self is cemented through the stories we tell ourselves, and our sense of community is cemented by the stories we tell each other. In DAOs, like all organizations, stories are the lifeblood that remind us of who we are and why we are here. There is a vast literature around the organizational and psychological impact of stories, which web3 should deeply study.

Among other things, lore, stories, and the collective memories that shape them are able to replicate the emotional and metaphysical power of close relationships, and facilitate sense-making through world-building. Importantly, rather than MBA-style top-down mission-statements,7 stories in DAOs are crafted by and for the community. These stories retain their memetic power, and guide us through the darkness and towards the light like a compass magnetically pulled towards the vibes.8

Dimensions of DAOs  by @rafathebuilder

Fundamentally, these modes of scaling are often non-hierarchical. We all collectively author our stories by setting our shared meaning (mission), rhythms (ritual), and collective memories (lore) without direct assistance from external authority. We, as community members, craft and solidify lore together, build our worlds, and by doing so we lay the foundation for everything else.

More importantly, we do this not to drive some abstract notion of business value, but rather to manage our own mental models around what we want to see in the world (world-building). In the case of DAOs in particular, we can then use our own shared currencies9 to take the actions directly related to the world we've imagined (e.g., creating a solarpunk future). Each of these elements helps keep alignment in place a little bit longer, past Dunbar's number, and helps us build our castles in the sky.

One of many possible positive-sum futures by Studio Ghibli

DAOs as Commons -- Setting Rules for Ourselves

Structure takes on many forms, but in DAOs non-traditional forms of organization are often the most interesting to consider. In her seminal work on governing the commons for example, Elinor Ostrom outlined eight principles to help set structure within non-hierarchical groups managing shared resources:

1. Set clear boundaries between resources and community
2. Define rules locally before setting them globally
3. Create bottoms-up participatory procedures
4. Build accountability once rules are set
5. Apply graduated conflict resolution
6. Make it easy and cheap to resolve issues
7. Build legitimacy by working across groups to harmonize rules
8. Create nested structures of governance as needed

Ostrom's principles are above all else simple, but still lead to major improvements in coordination, and in turn higher chances of an organization achieving its goals. But although these principles are simple, they require coming to shared agreements that can harsh the vibe. By trying to maintain the vibe above all else, we sometimes swear off even simple forms of structure for too long, incurring debt along the way. In short, we end up flying our castles too close to the sun.

In the case of ConstitutionDAO, the rapid growth around a singular mission (purchasing a copy of the US Constitution) was followed by its swift demise as the community fell short of its goal. As the group scaled, it became increasingly hard to reach consensus on decisions like how to manage treasury funds, how to assign responsibilities, or how to deal with increasing interest from the media. Eventually, they had to take the approach of assigning a core team with high context to make sure things got done.

Notably, there's nothing wrong with this organizational equivalent of flash loans: pop-ups that make an attempt at a goal and quickly wind down. In the early stages, with high enough alignment and skill, superfluidity can even do the impossible. The problem comes instead when these organizations try to persist and scale. While sparks are what start squads off on their journey, it's also what leads to explosive flames.

These problems are not unique to DAOs either, Occupy Wall Street was able to quickly galvanize people around the immense inequities in the United States. The simplicity of "We are the 99%" was a powerful cry that united people across differences, established a sense of purpose, and laid the groundwork for coordination. However, Occupy Wall Street failed ultimately because of its lack of structure as much as because of the external pressures against it. It's worth learning from these examples to arrive at what the optimal configuration for a given DAO might look like.

Governance in Review  by Simona Pop

Another often ignored aspect of even nascent online communities, especially DAOs, is some degree of clear leadership -- a person or group that can help shape the frame to allow the community to recognize its own potential.

David Ehrlichman has written extensively about impact networks and leadership within these groups, and he believes that leaders in decentralized organizations begin to embrace a network mindset, whereby they cease working in isolation and begin to focus on building meaningful relationships and sharing resources. As Ehrlichman writes, "Fundamentally, the role of network leaders is to help diverse groups find the shared purpose that unites them, to foster self-organization, and to coordinate the actions that emerge so that they inform and reinforce one another." Rather than establishing themselves as the center point of an organization, network leaders decisively work towards establishing relationships between community members, further extending informal alignment.

Leaders in DAOs, typically, are just the people with more context. In more traditional organizations, context is generally reserved for the C-suite, and if you're a delivery person for Amazon, Jeff Bezos won't be sharing his meeting notes with you. DAOs, in our minds, aren't like that at all. Context is available for anyone who cares enough to look into it, and this is a powerful mechanism that allows anyone to become a leader practically overnight. In DAOs, "everyone is a leader, deciding for themselves to follow the group's evolutionary purpose."10

The Blue Pill, pg. 48,  by Yearn

By externalizing and sharing context, DAOs create environments where leaders emerge via their care, not their standing. DAOs enable a world where anyone, regardless of who they are or what they do, can become a leader. And we agree with Ehrlichman, and Rafa, that the best leaders in decentralized organizations are the ones who bring the most leadership out of others.

Central points of failure can further be eliminated through trustware, or localized hierarchies that distribute power and resources within a DAO. Like squads, pods don't scale on their own, but within communities where, leadership remains emergent and generative,11 like geodesic domes that can carry more weight because their structural integrity is distributed.

Whole Earth Catalog,  pg. 3

Considering communities as physical structures, it becomes clear how replacing centralized hierarchies with distributed networks allows for richer and more resilient structures to emerge. Leaders function like glue, connecting nodes in the network together, forming inter-dependencies. Relationships, fundamentally, are what keep communities resilient, and much like a geodesic dome, each point of connection strengthens the overall structure.

Re-Creation of a Geodesic Dome with Elmer's Glue by Maxwell Kanter

Future History of DAOs

DAOs were originally envisioned as having automation in the center, and humans at the edges. In practice, this has been far from the truth, and DAOs as they exist today are fundamentally human. While smart-contracts may allow for trustware on-chain, we still need to rely on concepts that are fundamentally off-chain -- on giving, sharing, and working together towards better futures.

All of this isn't to say we can't eventually build hyperstructures that further solidify the social agreements we create. Gitcoin, for example, wants to help communities fund their own shared needs with minimal social alignment by leveraging quadratic funding and other modes of collective intelligence.

Ultimately, whether we envision these organizations as guilds, cooperatives, networks, or hyperstructures, the evolution of DAOs is up to us. Even better, summits like the Governance Learning Forum continue to push us to think about these ideas (it's what pushed us to restart this piece after several months in drafts).

Rather than tying this piece with a bow, we'd like to leave you with a few more principles for organizing:

Principle 1 → Community is the heart of the DAO

A DAO is simply a group of humans who come together, form structures, and coordinate. As our friend David noted, these structures keep everyone "connected and in close communication so their actions are coherent and mutually reinforcing, combining into something greater than the sum of the parts." Only by keeping a community healthy can a DAO grow sustainably.

Principle 2 → Alignment is the lifeblood of community

Seeking alignment and consensus building where possible is crucial. Sometimes - it's necessary to move quickly and executively within a DAO, but it's important to be aware that this might create "alignment debt."

The most cohesive DAOs have formal processes (e.g., retros, practices around context sharing, recurring meetings) and cultural norms (e.g., contributor culture, social connections, inter-squad mingling) to help pay down this debt via regular consensus building. Establishing and maintaining high levels of shared context and trust allows communities to feel empowered to participate in a common mission.

Principle 3 → Sense and respond > command and control

As with all things, you can have too much or too little of them. It's possible to lean too far into structure (e.g., meeting every day at the same time), and at the same time, a lack of structure can be infuriating (e.g., we'll meet when we meet). Don't expect everything to be set in stone from day one, sense and respond to your environment with agency and conviction.

Beyond our three principles, Linda Xie, a steward and delegate at Gitcoin, also recently highlighted her key learnings from DAOs.12 Some of her key takeaways are as follows:

1. establish a clear mission to maintain alignment
2. explore progressive decentralization to ensure context is shared effectively
3. implement smaller working groups and enable local domains of authority
4. ensure accountability and ways of assessing engagement and activity
5. discuss compensation models that promote fairness and equity
6. establish long term sustainability (or defined lifespan) as an explicit objective
7. create a culture where people are comfortable having tough conversations
8. build in regenerative structures, take breaks and touch grass

Regardless of where you are in your DAO journey, we hope some of these principles will help guide you, and that you'll consider thinking about your organization first and foremost as a community. Let's think carefully about the kinds of communities we want to build, the kinds of agreements we want to make, and create beautiful worlds together.

We cannot build a future that we don't first imagine

Big thanks to Vishnu Kumar, Amy Jung, Ben Percfield, Connor Spelliscy, David Ehrlichman, Jihad Esmail, QZ, Rafa, Vivek Singh, and many more for your input and graciously reviewing this piece. We couldn't do it without you. If possible, we'll continue revising and adding resources to this piece, so check back soon!

1. Wendell Berry defines community as, "the mental and spiritual condition of knowing that the place is shared, and that the people who share the place define and limit the possibilities of each other's lives. It is the knowledge that people have of each other, their concern for each other, their trust in each other, the freedom with which they come and go among themselves."
2. In this sense, belonging is largely about familiarity between ourselves and our environments. Explore more about the science of belonging here.
3. Dat boi is a completely self-made meme. So many other memes are based on nostalgic childrens shows, funny faces, relatable situations, or references. Not dat boi. Dat boi is completely absurd. It's a low-res frog on a unicycle, and an arbitrary method for greeting him. The first person to ever upvote dat boi did not do so out of recognition. The first person to ever upvote dat boi did not do so because of a pre-existing meme format. The first person to ever upvote dat boi upvoted a meme literally pulled from the ether by sheer human creativity and willpower. Dat boi is evidence that humans can stare into the meaningless void of eternity and force their own meaning onto it.
4. As Other Internet writes, "Squads are both a product of---and a response to---contemporary social atomization." In the Century of the Self, Adam Curtis expands on this idea in historical context, showing how psychoanalysts Sigmund Freud and PR consultant Edward Bernays helped spur the consumerist, individualist movement that inadvertently led to the crisis of community we see today. 
5. This isn't to say of course that squads are not communities in a sense, this piece is definitely taking an abstracted view of some of these terms and their distinctions for the sake of brevity.
6. We're going to skip over the rest of the nuance from Venkatesh's work here but it is highly recommended.
7. To learn more about this perspective you'll unfortunately have to go to McKinsey.
8. The game design world might say that these components help create a magic circle.
9. In DAOs, it's common to attempt to create alignment almost in perpetuity through tokens. These tokens function as a shared incentive, and at their most basic push community members to coordinate around a common goal (sometimes as simple as 'number go up'). Often however, despite rallying cries of WAGMI, for DAOs without other forms of shared alignment or structure these incentives are not enough to maintain rich, meaningful connection and collaboration.
10. The Blue Pill, pg. 86 -- paraphrased from Reinventing Organizations
11. In the realm of digital public goods where Gitcoin is most focused, we often refer to the concept of generative commons -- unlike fisheries and forests, the more open source software is used the more software and usage it generates.
12. At the time this draft was made lol.