This document contains a summary of the proposed stakeholder types, making a differentiation between members and non-members. It then describes a potential approach to bootstrapping, starting with the worker-member group.
There are some stakeholders who may not be members of the DCE due to the short-term nature of our relationship, the desired sovereignty of that organization from our own, because their values do not align with ours, or some other reason. However, they do have a clear interest in our success, and may serve as directors on the board.
Who are they?
The folks that we form business relationships with to create products.
What are their interests?
Whatever their company’s mission is, profits.
How do they enable the success of the company?
We partner with them because we think that they can help us create/distribute/promote a product. We wouldn’t partner with them if we didn’t think they could do that.
How will they be included in governance?
They might serve on the board of directors, if elected by voting stakeholders. If on the board, they obviously have voting power there.
Membership to the DCE grants a group long-term governance rights, including board representation and voting rights. In most cases membership also comes with profit-sharing rights, though investors would more likely be given dividends, if anything. It may be determined that investors belong to their own, non-membership class.
Who are they?
Workers are the people employed by Blockchains.
What are their interests?
They care about benefits, culture, compensation, and purpose. They want to be able to stand behind the products of the company. They have a stake in the success of the company and the ethics of the products because their reputation in part depends on it – especially for the researchers, engineers, lawyers, finance, operations, and developers.
How do they enable the success of the company?
Their wide-reaching interests in the success of all aspects of the company, from profitability to compensation to the production of ethical technology make them the heart of the company.
How will they be included in governance?
They have voting and profit-sharing rights through Colony.
Reputation/Voting:
Reputation is based on a peer-review process, as to promote cooperation, leadership, pro-social and productive employee behavior. Employees will have at least two board representatives, and a system of governance for internal operations, hopefully sociocracy.
Profit-sharing:
Securities laws may have something to say about whether these funds are paid out to individuals or to a joint fund, but either are possible through Colony. I recommend that if employees are given stock options separately from this (and therefore already are rewarded for the company’s financial success), then profit-shares are paid to a joint account to be distributed according to decisions reached through internal governance. This would provide a means to fund employee benefits/perks/bonuses/etc, and to give power to the collective will. If no options are provided, then profit shares should go directly to the individual, because this company’s stance has historically held an individual-first orientation.
Who are they?
Residents are the people who live and own businesses within the city.
What are their interests?
They have an interest in the safety of the community, in there being adequate services and opportunities. They care about economic policies, zoning, business regulations, community rules. They care what technologies come into their communities, how much and what kind of data is being extracted, and how it is being used and stored. Many of their interests will be mediated through internal governance but these lines have not yet been drawn.
How do they enable the success of the company?
Smart city residents offer an important sample to measure what is and is not socially, politically, and economically desirable. They will show the human/social/political/economic consequences of Blockchains products. Absolutely crucial to listen to this community.
How will they be included in governance*?*
They have voting and profit-sharing rights through Colony.
Reputation/Voting:
I propose a quadratic voting system, or another vote-budgeting system that allows for the expression of strength of preferences. I cannot see the benefit of having a reputation system in this context – attempting to incentivize people with more voting power in this context has too many complicated implications. Ex: You want to incentivize participation by giving people who participate more power/money, but participation is easier for some people than others. Maybe you want to dis-incentivize crime, but this would be an invasion of privacy, would not be effective, and does not recognize that policing is not done equitably.
Securities laws may have something to say about whether these funds are paid out to individuals or to a city fund, but either are possible through Colony. They will have at least one board representative, and a system of governance for internal operations.
*This would only work automatically if there was some kind of blockchain tracking system for who lived here. Census info, essentially. Which I think I would be opposed to because privacy. There could be an opt-in system where people had to submit info to an authenticator of some kind, but then you would have to have someone whose responsibility it was to authenticate, and checks on that person. OR we just send a QR code to every new resident that gives them an address/membership to our organization. It is a smart city though – there will probably be some kind of app.
The people that we are serving, and who support us through purchasing/using our services. Essentially consumers, or users, or whatever, but we reject this language because those terms imply a one-way relationship when we seek a collaborative association.
Their interests are that the product is affordable, suitable to their needs, does not infringe on any of their rights, or require them to compromise their moral convictions.
Without people using our products we have no purpose and no way to fund ourselves.
These individuals will be given profit-sharing and voting rights through Colony. Product-specific applications will be built to include Colony in their back ends.
Reputation/voting:
There should be product-specific sub-classes within this group, each earning reputation in ways appropriate to the product they interact with as to incentivize the behavior we want.
This is somewhat of a legal nightmare. Revenue sharing is apparently legal? But, as this is not my area of knowledge, I will only suggest that sharing the $ with individual customers is the most rational approach, since customers are unlikely to have shared interests well enough to spend money collectively. Because payouts to customers would likely be small, however, it would be ideal if customers had the option to donate the profit to a good cause of their choosing. A thousand people choosing to donate a few bucks each to a charity could do the charity a lot of good, but a few bucks for a person doesn’t make much of a difference.
Tasked with the question, “what is the ethical thing to do?”, employees of a nonprofit Web 3 Ethics and Education nonprofit form the philosopher member group. As an organization, they seek to promote ethical technology through education, reporting, and legislation.
While largely independent from Blockchains’ management when it comes to hiring/firing, HR policies, priorities, mission, etc etc, they may still be reliant upon Blockchains’ funding and therefore have an interest in not ruffling certain feathers. If they receive profit-sharing rights, then they also have an incentive to make this company make money. Otherwise, their interest is on the good of society as a whole, and in promoting practices to help us use technology to realize a better future.
They do not directly affect the business success of our company; rather, they can influence the moral/ethical success of the company.
They will be allowed voting and profit-sharing rights in the company through Colony.
The mechanism by which they choose to allocate reputation (or whether they want it to be 1p1v or budgeted votes) should be decided internally, rather than by us. However, we will be able to offer our templates for reputation and vote-budgeting.
I recommend that profit-sharing be initially distributed to a shared pot, since the mission of this group is collective-based. However, if the voting system is left undefined, conditions on how the money can be spent must placed on it to avoid exploitation.
*This group’s existence is pending the formation of said nonprofit.
They’re investors
Financial
They give us the money necessary to succeed and might push us toward financially responsible choices.
They should have a minimum of one board representative to serve on the audit and risk assessment committees. As a class they get no profit-sharing rights, and though they do have voting rights, they are only able to elect select directors representing financial interests. At this time, I see no clear advantage in facilitating their participation in governance via Colony. They are also a slightly different member type than the others, since they actually own part of the company, whereas the other groups are not owners, but voting members (they don’t hold stock).
I propose the DCE will begin with worker-members as the sole voting population, with permissions enabling executive control (or majority voting power) if desired. Over time, as products come to market (with Colony’s system built-in) and we begin accepting investor funds, voting power will be dispersed to include product-participants, and investors as they come. The same will be true of the philosophers, if and when we choose to found said nonprofit.
Every group should have the right to their own board representation. No other member group, nor investors, have say in the election of the board representatives for their member group. On universal questions (3rd party reps, issuing new stock, whatever policy questions we open to member-wide vote), every stakeholder group should have equal say. The consent model offered by sociocracy, which should rule the board of directors, and the right of every group to have its own board representation, empowers every group and makes coercion or abuse of power unlikely. All member groups are crucial to the success of the company, and should be treated as equals.
Our company has its toes in a lot of ventures and stakeholders vary between them.
Allowing consumers of a specific product to have influence over that product makes sense. It is also the case that governance of such a wide portfolio is challenging for a company, because executive attention and decision-making is a scarce resource. Allowing for greater autonomy and product-specific governance will enable greater agility and informed decision-making.
For these reasons, I propose product-based governance – each product should have its own mission committee which functions as a sub-board of directors, with stakeholders serving alongside product managers and executive-level employees to make budgeting and mission-related decisions (in line with the company’s BoD)
The Board of Directors remains the central authority on the company’s mission and finances. Product boards are under its authority.
Illustrated to include non-product-specific components of the organization. It is probably that the workers on the on a particular product board will be the same individuals; the difference is that the product board includes product participant representation, and may also include other member representation, whereas operations are fully internal. Individual workers may exist within multiple domains and on multiple projects, and cross-department collaboration would be the norm. Clear communication, mission alignment, and transparency in this organization are key to success.
Let’s start with the board of directors, since this is the principal Board. The board of directors should be comprised of the CEO, the COO, an employee-elected employee delegate, one or two elected representatives from each member group, and third-party directors. Member group representatives need not be a part of the group that they represent, so long as they are elected by the member group that they represent.
There must also be an elected moderator to serve as chairman (not the CEO), who should be trained in (or else receive training in) nonviolent communication and circle facilitation under a sociocratic, restorative justice, or similar model. This individual may be an applied anthropologist, expert in business management, a social worker, counselor, psychotherapist, or similarly experienced/educated individual. Their role will be conflict mediation and meeting facilitator. This person should not be specific to any one member group, and should be a neutral third party.
There may also be non-member or member-specific representatives who may be individuals from partnering businesses/organizations, or industry advisors.
Together, the board should total no more than 15 individuals, and non-member specific representatives may never outnumber member-specific directors.
A summarized list of slots on the BoD:
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One or two representatives from each member group
- For the worker group, it will be the one of the following: CEO, President, or COO (an executive), AND an Employee-elected delegate
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Between one and 5 non-member specific representatives (partners, advisors, etc)
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A facilitator (third-party elected chairman)
Because each stakeholder group has board representation, if there are more than a couple stakeholder groups, the size of the board will quickly become unwieldly. To address this concern, I propose the following rule:
If there are four or fewer member groups (including workers), each member group is entitled to up to two board representatives. If there are more than four member groups, then each member group is restricted to one board representative, with the exception of the worker member group, which should always have an executive and an employee delegate representative. When and if a fifth member group is added, all directors may complete their terms, but after that period each member group (other than the workers) may only have one representative.
While the board of directors has at least two product-participant representatives, the BoD does not have representation for every product due to the infeasibility of such a large board. To allow for more feedback from and collaboration with the product-participant group, they should have representatives elected to serve on consent-driven product boards. Additionally, the product-participants should be consulted on major product updates and developments, especially in when an issue in question is contentious. Product boards should also include representatives from any product-specific partnerships, the product owner, product manager, an employee-elected employee delegate working on the product (regardless of organizational hierarchy), and an executive representative.
A summarized list of slots on a product board:
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Two representatives from the relevant product-participant member subgroup
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Product manager
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Product owner
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Executive representative
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Employee delegate
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One or two representatives from product-specific partnerships
In the past, we have discussed the possibility of five/six stakeholder groups:
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Investors
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Founders
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Employees
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Developers
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Nonprofit
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Trusted Sources
I am only partially informed as to the justifications and reasoning behind these groups, so my responses may be incomplete. I will, however, summarize my understanding of each, and provide a response.
Investors are a self-explanatory group, but I have heard you say that they should either receive no voting power, or limited voting power. The reasoning here, I believe, is that investors represent Wall Street, Big Money, and financial interests, and you spent decades learning as a lawyer that these people often do not have the best interest of people in mind.
I’m not a big fan of the soullessness of Wall Street any more than I am of it in Washington, and I agree that their power should be checked. However, I do think that financial interests are worth representing alongside other interests. This is why I have included them in the governance of this organization. Plus, there are actually some pretty cool investors and investment funds that want to fund ethical businesses. We don’t have to work with shitty investors. In fact, I would be opposed to that.
You, David, and Lee. A small group of founding individuals who guide the purpose and soul of the company. The visionaries. These people should have say in the company and be rewarded for its success. Over time, when the company has been firmly established and is able to self-govern, founder control would fade from total to none at all, while profit rewards would continue.
I am not at all opposed to any part of this, but Colony makes it possible that you don’t need to be your own stakeholder group to enable this kind of shift in power. You can do this relatively easily by shifting reputation protocols and permissions. As for profit-sharing, the logistics depend on whether we’re facilitating profit sharing and voting through stock or not, but either way it’s workable.
Employees are the people doing the work to create the products and make this whole thing happen, so they should be rewarded for their work. They should be able to manage their profits how they see fit, but that money will initially be allocated to the employee group, rather than automatically allocating that money individually. They should have some say in the governance of the company because they are the ones tasked with carrying out the orders.
I agree. I prefer to call them workers, because I don’t like the power relationship that employee implies. There is the employee and the employer, the bourgeoisie and the proletariat. The owners and those tasked with making them money. 🤮 But we are all workers. Executives or custodians, we are all workers. And in the DCE, we all have power. The word should reflect that.
Developers have the best interest of the Ethereum and Web 3 ecosystem in mind, not the success of the company. They act as an ethical voice. They made it possible for Blockchains to exist in the first place.
Word. I have an immense amount of respect for this community and want them to have money, since open source development doesn’t always reap financial rewards. However, the issue I have with this is that facilitating their participation in an official context is infeasible. Many of these individuals prefer to remain anonymous, they are global (making legally including them a challenge), it is difficult to measure contributions, and they are unlikely to have any interest in participating in our governance. [redacted] has a clever way of identifying developers using on-chain data (measuring the amount of gas used by an address to deploy EDCCs), but he admits it isn’t perfect because many developers use multiple accounts for different purposes, or to maintain pseudonymity. Even if we ignored that issue and chose this path, we would have a hard time with the SEC if we try paying out $ to unknown addresses. And even if we decided to try to get these people to do AML KYC, the chances of participation are low. Even Aragon – a hugely popular ecosystem-supported project with no KYC AML anything only has like 64 addresses participating in voting. If we want to support the developer community, we can fund open source projects. If we want to consider their opinions, we can conduct surveys and AMAs and ask them.
These are the users of our identity system. They would have something to say about how their identity is measured and used, both from a UI/UX perspective and from an ethics perspective. Identity is supposed to be a key pillar to Blockchains, and so this group represents that interest.
Sure. I think they can be included in the product-participant group. There could even be some rule that the BoD product-participant representative come from this group, if you want. Ultimately though, if we want NetID users to have significant say, then it should be a system that is wrapped into all of our products, so that all of our product-participants are also NetID users.
These are the people who sign people up for NetID. They are licensed individuals, probably lawyers, whose licensure is at stake if they behave unethically. They do the hand scans and ID verification. Their licensure is their skin in the game, so they would be trustworthy.
I respectfully disagree about the inclusion of this group, and the ethics of the existence of this group in the first place. Onboarding done in this manner would be expensive, time consuming, and inaccessible to most people. Nevermind the fact that they would then have to buy a hand scanner, which would also be expensive. Further, if we are attempting to create power to the individual, and to buck these traditional systems, why would we further reinforce government power over our identities and explicitly link our online behavior to government-granted identities? This enables possible violations of human rights and invasions of privacy. We should only require ID when it is necessary, and there are already ways to do ID verification without hand scans (we have drivers licenses already).
An education-focused entity responsible for spreading the word about blockchain and Ethereum. They’re keyed in to the public’s knowledge and how difficult blockchain technology can be for people to understand, and they’re experts in communication and onboarding. They also somewhat of a neutral third party with the ecosystem’s best interest in mind.
Again, agreed. I don’t think that they’re entirely independent, but I think they are as independent as is reasonably possible to still be able to expect participation in governance from. I think explicitly framing their role in the DCE as “philosophers,” might help hold them to that responsibility, both in their own minds and in the minds of the other members and directors.