On The Other Side ep 31 - DAO Mini-Series: Values-Aligned Compensation
Primer: How do we decide how much someone should be paid? In this episode of On The Other Side, host Chase Chapman speaks with Aaron Dignan and Rodney Evans from the Brave New Work Podcast concerning mental models of compensation and their thought process behind remuneration.
Mental Models To Think About Compensation
How DAOs operate is very much influenced by traditional organizations because of tax law, legal structures, etc.
Based on broad trends, compensation is atomized by:
Role (e.g. Chase’s value is X, she gets paid X)
Piece of work (e.g. want to be paid Y for this effort every single time)
Rodney offers a third approach — being a contributing member/core team of the DAO, with roles layered on the individual
Difficulty In Atomizing Tasks In A DAO
💡 Chase highlighted that the types of work that are valuable to the DAO are really hard to atomize.
Strategy or business development roles are hard to atomize and to figure out an appropriate compensation
Compensation Approach At The Ready
💡 The Ready is a company founded by Aaron and Rodney.
At The Ready, compensation is derived from a series of choices
Some of these choices include:
Is the compensation going to be person-based, market-based, or internally augmented?
Is it role-based or employment-based?
Is it contingent or guaranteed?
Is it localized/country-based or global?
Is it self set, team set, leader set, or committee set?
Is it secret or transparent?
Is it based on skill and reputation?
Is the review of compensation connected to performance and feedback?
Having answers to the above questions will help determine compensation
How Do They Decide On Compensation?
Need consent from representation of all members
In a subcircle, the circle can create a compensation agreement for the non-base member
Might have a core team kickstarting it and everyone consenting to those foundational agreements, with the understanding that there will be more variation specific to the types of work down the line
DAOs And Profitability
Some of the circles at The Ready are not profit-generating
A central fund could allocate to multiple circles
There’s a difference between products that are used internally vs being sold externally
Have to look at the phase of the company:
If it’s year 1 and they still don’t have product-market fit, it will be a problem
If it’s year 7, they could be looking for product diversification
The Emergence Of SubDAOs And Its Relation To A DAO’s Primary Business
If you are thinking of spinning an internal service to an external one, make sure it works very well
Have to consider whether the subDAO is created because it has found product-market fit within the DAO. If it’s not, it’s more likely for it to fail
“A lot of subDAOs tend to be very experimental in the sense that it's not necessarily something that's like, hey, we need this and maybe other people can benefit from it.”
- Chase Chapman
Have to consider what is being incentivized:
Long-term or short-term?
Scaling an organization vs selling it?
Collectivism or individual benefit?
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