Creator Stories Episode 9: David Phelps
On the future of DAO governance, and why teams should focus on Fun.
This article is a transcript of a live interview conducted by Cody McCauley. To attend our next Creator Stories episode, follow us on Twitter. Also, make sure to follow David Phelps on Twitter. We hope you’ll enjoy the conversation as much as we did! 😉
Cody: Hey David, it's good to have you here on the podcast. To kick things off, I'd like to ask you how web3 became the space you wanted to lean into?
David: Hey Cody, thanks for having me. That's a great question. I first got into crypto in the 2017 summer. To be honest, it's a long story of a failed Task company that I had, where we were trying to do automated billing and invoicing for freelancers.
Unfortunately, we got crushed for many reasons - one being my own inexperience and stupidity, so we should probably factor that in - but another being due to credit card fees.
I'd known Bitcoin for years. I had a friend who was a junkie in 2011 who was just talking about how amazing this thing was. That you could pay like a hundred big clients and get a bag of drugs in the mail, how cheap and easy it was, and that it was this whole new decentralized economy, one where you could throw digital money out and get something in return.
By that time, I thought it was simply an "okay" use case.
But when Ethereum really emerged, and I started reading about that, that just made a lot more sense to me. Partly because of the smart contract piece, but also because Ethereum is fundamentally not about paying for real-world goods. With digital currency, if it's about paying for digital goods with digital currency, I'm creating an entire digital economy around that - with all the advantages.
At the time of 2017, that felt like you did appendages of scale and speed. So I got really hooked, and I took most of the money I had, and I put it into Ethereum and just became an absolute trading God among all of my friends for the next six months (both joking).
And you can imagine where this story ends up.
Me, at the height of my hubris and ego, saying, yeah, you know what? I got these 10 X returns in six months, but that's really not that good because all these other amazing coins are out there. And they all got like a thousand X returns, and that's where the real opportunity is, and I need to take all this money.
Obviously, I got what I deserved. In January of 2018, I didn't sell any of the coins I had, and almost all of them plummeted. I did that because I still fundamentally could see that this would be transformative in terms of technology for transactions, but there was no real interest that I had in going deeper than that.
I was running a company and, It wasn't a social thing.
But when 2021 came around, a couple of things happened.
One was, I said, "You know what? I need to actually do my research this time and figure out what these chains do and how they work. I'm not just investing in the one that made a thousand X over the past six months anymore".
So I started doing a lot better research into the actual ecosystem and what was happening. The other factor was that crypto became social, and this element became really important and crucial for some of the success over the past year and a half.
It's a double-edged sword in the ways that people use social capital in the space, crave it, or get addicted to it. But at the same time, It really felt like there were now, with DAOs a real opportunity to actually get into the space on a social level and meet people.
And so that was really exciting to me because, in 2017, all I wanted to talk about was crypto, and I didn't really have anyone to do it with.
So I think sometimes we underestimate the ways we've democratized conversation within the crypto community, and how important that is, but also how important it is that we keep doing that and try to make it a little bit more inclusive.
Cody: Ahah you're right. I remember in 2017, when I first got into crypto as well, there were only one or two of my friends that was fascinated with it, and I remember going to a bunch of random meetups in New York at these rooftop bars to talk about it. I'm amazed to see what's happened over the past year and a half or so, with groups that have emerged and that are trying to make the space more inclusive and diverse.
David: This is great. I also want to emphasize that, of course, it's about democratizing equal opportunities and access, but it's also about the explosion that you get from putting minds together in a space where they can dialogue with each other rather than monologue.
That, to me, I think it's just profound. Like if you look at how many major people in crypto right now went through consensus, which is - I'm never was there so I can talk about it - a cursed organization that is hated by almost everyone who's ever worked there.
And yet just by virtue of having all these people in one place talking to each other, it has produced an incredible array of projects. Not itself, not anything it did, actually it totally stifled those and prevented their innovation. But the people there, simply by being together, we're able to create a lot of great projects, which, thank God, they've spun off out of consensus.
That seems like the really important piece, which is, it's not just about having people in this space, it's about having conversations in this space. And when you have more perspective, more people in the space, you have more conversations, and that's where the work gets done. I think you can't do good work if you do not have a socially inclusive atmosphere, or, at least, you can't do as good work as you would do otherwise.
Cody: Yeah, I think that's an awesome point. So you have your hands in a bunch of different projects these days. Can you give a high-level overview of the different things that you're working on and how you're splitting your time across them?
David: Uh, badly aha, with a task list that is never done aha. More seriously, I'll talk about the main thing I'm working on right now, which is Joke DAO.
Joke DAO is a governance game engine, and what I mean by that is allowing an actual emergent process for governance, where anyone can submit entries and then vote on them.
And so you imagine how that can be used.
That could be used for contests, for example, for games, for giveaways, but it can also be used for stuff like bounties, endorsements, grants, etc.
With this model, we could have user-generated roadmaps where any DAO can say, "what features do you want us to build?" and then their community can say, "these are the things we want to see and vote on them," and the DAO can build those.
So you actually have incentivized user-generated roadmaps, and you also have governance that's fun.
And I think that the key point is that by turning governance into contests, you can actually incentivize relationship building and incentivize that social off-chain piece of people getting together.
You know, this is a sticking point for me that many times when we talk about gamification, we mean giving PAOPS to people, and that's not gamification. That's commoditization. Gamification is about relationship building and creating safe spaces for chaos. That's, fundamentally, what we're trying to build. A far better governance system that actually is much more emergent.
Then, I think the next step is you imagine if this is all being done on-chain, it can be extensible so that people can vote and have whatever they vote on automatically done and transacted.
So you could say, "What are the qualities of the NFT that you want us to build?" and people could vote on three of them. Those top three choices could all be combined together, and the NFT could be created. So you have this thing that no one talked about yet, which is composable governance, in which you have these different options that can all be combined.
That's certainly a long way away for us before we're able to do that, but I think it's very much the future and something I'm personally really excited about.
Cody: What was the origin story for Joke DAO? Was there a specific moment or experience with some of the other governance platforms that existed in the ecosystem that you were just like - "there has to be a better way"?
David: Well, I have the dumb story, which is the true one, and then the smart one, which is not.
So the dumb one is that I was drunk and telling a bunch of stupid jokes and thinking how funny it would be to have an entire Twitter account based on Silicon valley jokes that were all just absolutely awful and egregious.
That was with one friend that I was iterating on that, and then we thought about turning this into a contest and a competition for who could write the worst jokes and then compete against GPT-3, who's learning from you and also trying to craft terrible jokes.
I think that's the actual origin story of what happened, which is being drunk for multiple nights.
Then the more profound and entirely false answer is that I think governance is really cursed in the way it's done right now, and I truly believe in embedded education.
Education needs to be embedded in the experience so that you're constantly learning from it and incentivized to learn more when you are doing something. It's the case with YouTube videos or Figma.
For governance, I think this is the opposite of what we have today. We currently have this governance system that's completely hard to understand and not embedded at all.
When you think about how Figma successfully killed Photoshop, illustrator, or Sketch, they've done it because all of those tools are just for professionals, whereas Figma is a tool that's both for professionals as well as for beginners.
I think that that's where governance is, is we have like the Photoshop for governance, which is something like Snapshot, and it's really advanced and has tons of options, but it's also very centralized, off-chain, and requires the core team to say, "here's a proposal of everything that we want to do. Do you agree? Yes or no", and then vote publicly on it.
We're trying to develop something a lot more flexible that can be used in a multipurpose way, probably for ones I haven't even thought of, and is actually emergent and fun.
Cody: It's really fascinating. The analogy between Figma and Photoshop certainly resonates with me. This more compelling governance model you talked about is really exciting, and it'll be interesting to see how that evolves. There are probably a bunch of use cases that we haven't even thought of that this can be used, and it'll be fun to see how those come to fruition over time.
David: Ellie Day is one of my favorite people to talk to, and she had this brilliant idea that I can't stop thinking about. Blockchains are trustless and fully automated, the node should basically be doing the work, and people should be able to transact and make very objective decisions in this trustless system, which is great for stuff like financial transactions.
But with governance, it's almost like the opposite. Governance is about how do you build trust? How do you build relationships? How do you decide qualitatively what you want, what your desires are past the point of what's true and what's false?
The process of actually doing governance well is almost the opposite process of doing financial transactions on the blockchain, and Ellie had that brilliant idea where you could line up all these transactions, but they only go through when people decide they want them to go through and decide to make that transaction happen because they collectively believe in it.
It's great for anything that's qualitative. It isn't just automatically moving funds. You can actually have social consensus determine whether or not transactions go through.
Cody: Yeah. That's super fascinating. So you, you're built Joke DAO in public and have tweeted about all the different tools you've used to get it off the ground. As someone who's built products, both in Web2 & Web3, I would love to get your perspective on the Web3 stack and the composability between the different tools you've used. How does that relate to some of the Web2 software tools that you've used in the past?
David: One thing that really struck me was using neuro split contracts at Eco DAO when we need to pay people out.
When I built my first company in 2014, we wanted to set up automated dispersals for revenue that would be divided between the worker and the company and have that as an automatic/public/transparent split.
And that was all kind of revolutionary in 2014, aha.
We were really the first users of Stripe Connect, and we did three months of dev work to implement this, and we were transparent about how the numbers were split.
Instead of having any sort of billing, this was all automated, and it felt so state-of-the-art in 2014.
And I got to the mere split contracts in the fall, and I've managed to basically create that myself with no code in about five minutes. I thought, "this is a really wild change, now, just anyone can do it in their bedroom in five minutes."
It's no wonder teenagers are able to build billion-dollar protocols, there's a lot less work they have to do because they can just build on all the other work that's out there.
To come back to your question, that's what I think is really exciting about working in Web3. It just has this modular stack where you can pull the tools you need. The all-in-one DAO tools don't really work because we don't live in this all-or-nothing space. We live in a modular space, where you have certain purposes and needs, and where you find the tool to do it, then piece those together, and everything's done on-chain. It's already all interrelated. There's no problem with reprocessing data from one platform to another.
For Joke DAO, that's what we built ourselves. We were using Mirror Write Races before those were stopped. Then, we built our own platform.
We use Coinvise for airdrops as well. So when we want to reward winners every week, we use Coinvise.
It's so incredible to be able to build something with such simplicity with such few tools. Even the initial version of the joke races that we were doing was just done with Mirror and a few other tools. We built this entire novel experiment in governance with three or four tools that were already out there just by thinking about how to use them creatively.
Cody: The ability to just get up and running in an apparently seamless manner is crazy. If you think about where Joke DAO is today and what you envision it being by the end of this year, how do you see things evolving over the next half a year or so?
David: A lot depends on financial sustainability. Our biggest pain point right now is getting money. It's really hard to get a grant, and that's very frustrating to see when you're trying to build something that's really like a public goods project.
I'm probably one of the better-known people in this arena of DAOs, and it doesn't matter - it's still so hard to get money. That makes me really sad, and it's frustrating to see how difficult the access remains.
Assuming we do become financially sustainable, the long-term goal is decentralization and making the community decide what we build long-term.
By the end of this year, I'd really like to see rewards and penalties function. Also, partner with some projects that we really care about, potentially build out governance for them, build an SDK, and become part of this modular suite of tools for anyone looking to start out.
Cody: I think that's a fascinating point. And candidly, that's something that we're thinking about at Coinvise—building out our SDK and being able to embed a lot of our tools on native sites.
Shifting gears a little bit, what you're doing within Web3 seems to center around community building, and the idea of Joke DAO is ultimately community-owned to the point where you could eventually step back from it at some point, and it can continue to run. Did you initially think of yourself as a community builder? How did that role evolve over time?
David: I would say that's the thing I care probably most about, but I don't know if it's what I'm particularly good at. There are others who are a lot better at building community actually than I am, so I don't know what's my strength, but I think this role is important.
I do believe fundamentally that you do have to value the autonomy and agency of each person in your community and listen to what they want. You can get far by having a cult, but ultimately you want a community where people actively want to spend their time.
I think this is the unlocking of DAOs because you can have an incentive model in place where even if it's not the most lucrative thing they ever do, it's worth it.
Part of the reason that I'm really talking so much about Joke DAO on this call is that what is exciting about it is that it's a framework to incentivize community building and a framework for people to really build their own teams that can almost operate like sub-DAOs as well. And so the most rewarding thing to me about what's happened with Joke DAO is that it's incentivized the creation of these teams that I'm not involved in, and I've never been invited to join.
To me, it feels like a far more sustainable (and potentially scalable) way of building community.
Cody: Yeah, that totally makes sense. Beyond some of the stuff you're doing with Joke DAO and your involvement in DAOs more broadly, you also write A LOT of tweets and a pretty awesome newsletter. What's top of mind currently for you that you're excited to write it out next?
David: I should do a joke contest because I have a bunch of ideas, and I don't have enough time or concentration or attention. I should let other people propose what they want me to write on aha. In some ways, you can write much better pieces when your audience wants to hear from you because you're actually being responsive to their needs.
Regarding the pieces I'm looking at next, I want to do one on what I'm calling "context disruption," which is basically a way of guilt of gaining social clout by breaking the context of what's expected of you. I would say that this has been done, this has become a playbook between figures like Donald Trump, Kanye West, and Elon Musk, but it's always, in those cases, the same playbook, which is to be kind of immature man-child figure when you're expected to be mature. They use that as a way of, somehow, seeming more relatable and more authentic, even though what they're doing is so clearly a performance and so theatrical at the same time.
Running a DAO like a blockchain is another one that I've been playing with. I'd like to explore what it would mean to run a DAO the same way that we run blockchains. And so you think about Vitalik Buterin's recent posts like "End-game," where he talks about how block production needs to be really centralized, but block verification needs to be decentralized.
Cody: Nice. What do you think will be the catalyst for data blockchains to break more into the mainstream?
David: Yeah, good question. I don't know. Gaming is most likely as I think this is a really prime use case.
Vice industries and fun are always good places to look. VCs always have this clause that they're not allowed to invest in sex industries or whatever, and it's just absolutely absurd on every level of misogyny, but also to their own returns.
A lot of the excitement is not necessarily transferred over past experiences, so the question is almost what kind of new media will become possible from this technology.
Cody: Yeah, that's fascinating. Good analogy as well. You have a pretty unique lens into a lot of what's happening across the ecosystem. What else are you most excited about in the space over the near term? And then like extrapolating maybe towards the next couple of years.
David: Yeah. I would just take it down and say data blockchains are by far the most exciting thing. We'll see immutable chains that can automatically update over time, so your data isn't locked in. It changes as you change. With that, you can imagine playing a game where you don't need to archive every second of the game. It also has incredible implications for historical archiving, with different materials that can be re-composited.
With that, you have data availability (which is a kind of lousy term because it simply means you can check blocks), but that could allow anybody to create their own roll-up and have their own execution chain. It can be slightly dystopian, but governments and banks will likely have their own blockchains in the future.
The question is, will social consensus support that? If you're in a digital space and there is no longer a backing military, you can create your own government in your own blockchain.
We can see some really fascinating future cases of celebrities & individuals creating their own blockchains, and it's going to radicalize and change politics totally. When you imagine the next generation, who's currently like four years old, and by the time that they're voting, they're used to being able to create their own money, manage it, support it, create their systems, and have the optionality to decide what financial systems they support based on their personal beliefs.
The idea of having to be wedded to one that is military-backed, I think will be a little foreign to them, and I think that'll be a fascinating thing to see play out long term.
Long-term, we're looking at incredible social changes when you have entire generations raised with this as their norms, ideologically, and then expected to step into the ideological norms of a world that is not necessarily keeping pace.
Cody: That's incredible. It's going to be very interesting to see how everything plays out on that front because there are really no historical parallels to what will unfold over the next few years. Thanks for your time David. It was great chatting with you.
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