Upside co-op | The DAOification of Brands

The DAOification of Brands

Rather than attempting to radically alter an entire organizational structure, web2 brands should progressively DAOify their organizations in accordance with their needs. This hybrid ‘web 2.5’ approach offers a realistic solution for web2 companies looking towards the future. 

Communities as DAOs

Organizing communities into DAOs is an additive process that would not require dramatic structural change within a web2 organization in the beginning. It’s akin to creating a new department, with minimal traditional ‘hiring’ needed. Likely only a Community Director would need to be hired at first, with the rest of the talent rising up through the community itself organically as needed. In this way, a community DAO can quickly become self-sustaining as community members take on leadership roles within the DAO. 

The Purpose of Community DAOs

Once the community DAO is formed, what can it do? What value does a passionate community member bring to your brand? The answer is: a lot. The beauty of the DAO structure is that it encourages total freedom to engage in meaningful dialogue, craft proposals, and execute a variety of tasks. Here are a few things a DAO could facilitate: 

  • Customer service (community members helping out one another)

  • Product feedback

  • R&D 

  • UGC (user-generated content)

  • Marketing campaign strategy and execution

  • Ad hoc tasks (design work, polls & surveys, bug bounties)

  • Funnel for hiring top talent

  • New product development 

  • Communication platform (easy place to market to your biggest customers)

This list is just a sample of ideas. One community DAO might decide to focus heavily on product feedback and development, while others may have an affinity for marketing, while yet others may truly enjoy the collaborative environment wherein they can truly find a sense of belonging. Regardless, these are all activities that can truly benefit the entire organization when a DAO is properly functioning.

Progressive DAOification

For many brands, a community DAO will be sufficient. Harnessing the power of community through DAOs will bring tangible and intangible benefits to any organization. Over time, some brands will find that the community DAO can significantly reduce the workload of other departments, possibly replacing them entirely. Customer service, market research, and marketing all come to mind. Every employee of a brand, especially the CEO, should interact with the community DAO on a regular basis in order to get a strong pulse (in real time) of what their customers are talking about. 

Although web3 native brands often pride themselves on decentralization from the beginning, the reality is that web2 companies should probably maintain much of the traditional hierarchy in order to be effective. Quickly replacing departments with a DAO would be unwise, much better to let the DAO organically grow and evolve first. The natural evolution of the DAO will offer clear indications of what work is being done, what is most important, and what is most effective. Only then should adjustments be made within the traditional company itself, and even then it should be done on a role-by-role basis, not department wide. In other words, let the DAO slowly eat away at the traditional organization bite by bite, until eventually it swallows up and incorporates entire departments. 

Incentives & Alignment

What motivates a community member to join a DAO? Primarily three things: a sense of belonging, a purpose, and compensation. A strong community DAO will naturally provide a sense of belonging, a thoughtful community DAO will find purpose, and a capitalized DAO will provide appropriate compensation. Currently, most DAO structures are completely independent of other entities. However, with the advent of brand community DAOs, companies finally have a unique opportunity to offer tokenized ownership to anyone, not just formal employees, VCs, and accredited investors. Ownership provides both incentive and alignment, particularly for long-term oriented individuals (the type of individuals companies want to attract). 

Building a passionate, empowered DAO with real ownership as incentives is a powerful tool in eliminating the current gap which exists between brands and their communities.