Debate: why would a founder build its company as a CO?


#1

2/ The model presented in the post is really interesting. For a product that a) is a commons of sorts, and b) achieves product market fit, I find that the model makes a ton of sense, except in one really important way

Greed

— Kyle Samani (@KyleSamani) October 28, 2018

I found the question asked by Kyle Samani (Multicoin Capital) about the CO model really interesting: why would a founder build its company as a Continuous Organization instead of as a private company where he can keep all the wealth for himself?

I think the debate is not really here. Of course, it is much more interesting to have a “traditional” organization in a world where you are the only actor and where you have the possibility to choose one model over the other.
HOWEVER, in a world where you have AirBnb and an identical alternative, and one offers equity and the other does not, you might expect the one with the DAT scheme to get more customers, happier and more loyal to the service.


#2

There are several answers to this:

  • First and foremost, you want to keep the control of your organization to be able to pursue your long-term vision. That is probably the most problematic thing with the VC model. There are obviously counter-examples but, most of the time, founders lose control after a few rounds. It’s not a problem if your goal is 100% to sell and get rich after a few years but it is a big issue if your goal is to develop your company to make it as impactful as possible and pursue your vision.
  • Second, if your organization rely on a community, it is much much easier to gain the trust of your community if you are a CO than a traditional org. And gaining your community’s trust is key for the success of your organization.
  • Third, in a CO model, the organization can purchase its own tokens regularly (by investing in its DAT) and distribute them to who they want, founders included. So founders could get more and more tokens over time, making their potential wealth creation substantial.
  • Fourth, liquidity is king. Would you rather create a company where you have 1 chance out of 1M to get $1B or one where you have 1 chance out of 1000 to get $1M? Concretely, the liquidity provided in the CO model makes it much more likely for a founder to cash-out some money than in the traditional organization model.

My 2 cents :slight_smile: