Lessons from ConstitutionDAO

What's up, everyone. This is Alex Lieberman, co-founder, and Executive Chairman of Morning Brew. Welcome back to Founder’s Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. So this episode is a little bit different than recent episodes that are very focused on mental models or career tactics, but I think it's going to work. And why I say that is, to be a successful careerist, you need to keep your finger on the pulse of technologies that are changing the world. Now you probably have heard of crypto, maybe you've heard of web 3.0, but this past week, there was a project that I think perfectly illustrated the power of this new technology and what it could mean for the future for all of us. So I hope you enjoy. This is all about ConstitutionDAO. Let's hop into it. 

Origins of ConstitutionDAO

So let me start from the beginning. Last Saturday, I'm DM-ing on Twitter with Packy McCormick, who writes an incredible newsletter called Not Boring. He also has a fund now that he invests. And he had tweeted about this ConstitutionDAO thing. And I can't remember the exact tweet, but it caught my eye because he said something along the lines of a group of people are looking to buy the Constitution. I DM’ed him saying, is this legit? Is a group of people actually buying the Constitution? And he said, yes. And before talking through what the last few days have been like, what being a part of this project and community has been like, let me just explain what ConstitutionDAO is and why this group, or this collective, formed. 

Starts back in 1787, September of 1787, the Constitution of the United States is signed by 38 of 41 delegates in Philadelphia. It begins with We the people, and this founding document established a structure of government that existed to serve its people. That's the Constitution, in case you haven't heard of it. Now let's fast forward. Today, 11, some people say 13, of the original 500 of the Constitution remain. And just two of those 11 copies are owned by private owners. One of those owners is Howard Goldman. In 1988, he bought the document for $165,000, which in today's terms is $400,000. Howard has since passed and he’s survived by his wife, Dorothy, Goldman. On November 18th, Dorothy put the document up for auction at Sotheby's, and they estimated the cost of the document would be between $15 and $20 million. All of the proceeds would go to Dorothy's nonprofit, which is focused on democracy education. So now that you have context on the document, it being sold, there's only 11 surviving copies, let's talk about ConstitutionDAO. 

So two friends, Austin and Graham, got wind of the auction and they started throwing around this crazy idea of why don't we put the Constitution in the hands of the people by buying it together as a collective? Others caught wind of the idea and later that day, this was on the 11th, November 11th, people caught wind of the idea, Austin and Graham were contacted. There ended up being this core contributor group of 24 to 30 people. They got on a Zoom call and they talked about how they would make this happen in a week, how they would do everything from legal to setting up a wallet for ethereum to be put in, to a relationship with Sotheby's to relationships with museums, to raising millions of dollars, how they would do that in a week. ConstitutionDAO is the name of the brain child, or the name of the project DAO sands for “decentralized autonomous organization.” And the premise was to create collective ownership over the Constitution and a community that was governed, not by one individual or a CEO or president, but the entire community would be working together using technologies of web 3.0 to make this happen.

The outcome

Now let's skip forward to the auction. The auction, like I said, was on November 18th. And by that point in time, ConstitutionDAO had absolutely blown up. $48 million was raised by more than 17,000 unique people. There were 21,000 members in ConstitutionDAO’s Discord channel, 39,000 followers on Twitter, and ConstitutionDAO had gotten press from basically the biggest publications in the world, Wall Street Journal, New York Times, CNBC, in every other outlet you can think of. This thing became a movement. Now, unfortunately, the results weren't what ConstitutionDAO wanted and not what I wanted since I had contributed to the DAO as well.

ConstitutionDAO did not win at auction. It came down to the wire, but unfortunately the document and all of its associated costs, like insurance of the document, storage of the document, dehumidification of the document, transport, that took ConstitutionDAO past its max bid of what it had raised. And while this sucks, I just couldn't help but notice there was so much optimism and pride around what this community of strangers was able to pull off in seven days. And so beyond this just being a really cool project to be a part of, and just a prime example of the power of community, I want to talk for a second about why this community specifically was a perfect symbol of the possibility of web 3.0. And when I say web 3.0, I mean everything from blockchain technology, ethereum as a programmable blockchain, any of the tokens, which you can offer through ethereum. So let me talk about why this project was special. 

3 reasons why ConstitutionDAO is special

First reason: It made the invaluable accessible. Historically ownership of rare collectibles has been reserved for the 0.1% of the 0.1%. Unless you had millions of dollars, you didn't have a chance, but via tokenization and web 3.0, you can own a piece of the DAO, which would hypothetically own the Constitution by giving as little dollars as you want. So for example, the average contributor to this project only gave $200 to hopefully buy the Constitution.

You know, some will say to this point, but couldn't you just do a GoFundMe, right? Couldn't ConstitutionDAO or Austin and Graham just create a GoFundMe and people contribute to the GoFundMe. Why do you need to use things like blockchain technology or Ethereum? And the reason is, you wouldn't have been able to guarantee ownership over your portion of the Constitution. Meaning if you gave $20 or $200 on GoFundMe, you wouldn't have actually been able to get ownership over the $200 you contributed, you wouldn't have been able to get $200 of ownership over the Constitution. If the DAO bought it, with tokenization and actually getting a token for your contribution, ownership on the internet of an asset exists.

Second reason this was so special: For the first time ever, you can fully align incentives of people in a community. By creating a sense of ownership through issuing a token to those people who contributed, members of the community were no longer just members. They were owners of the community, and now there is financial incentive to help in whatever way possible to get ConstitutionDAO to buy the document. So for me, that was writing a thread about it and getting hundreds of thousands of people to find out about the project, through my thread and amplifying the tweets of ConstitutionDAO’s Twitter account. For others, it was giving their time and knowledge to help with things like legal formation, auditing of the smart contract, the Ethereum smart contract, or relationships with museums or Sotheby's.

So once you have fully incentivized members of community to be owners and not just community members, it unlocks so much free marketing because the group has more incentive than ever before to make the project go well. 

Third: This is the best introduction to web three that I've seen. And the reason is, you don't have to believe in pixelated JPEGs like CyrptoPunks to buy into ConstitutionDAO, right? There are so many people who still believe that NFTs are a hoax, doesn’t make sense, you can copy any image on the internet, you can save any image, why areNFTs a thing. The beauty of ConstitutionDAO is that it marries the physical and the digital. You would own a token through contribution. And by owning that token, you have ownership over a group that owns a physical piece of history that is a highly scarce asset that clearly is worth a lot of money. You don't need to believe in the value of digital assets to buy into the idea of this DAO. And proof is in the pudding. 13% of the $48 million that was raised was by people who had never done an Ethereum transaction before. So clearly ConstitutionDAO acted as an amazing on-ramp for so many people that were not crypto or web 3.0 natives. 

Conclusions

So while ConstitutionDAO didn't win, it really was such an amazing experience. It reaffirmed the power of community. I became closer to people I've never met in my life through this community. And honestly, I was just inspired by the collective energy of tens of thousands of people that were trying to accomplish something that was bigger than themselves. It also showed me, and I just want to say that I am a healthy skeptic of a lot of crypto and web 3.0 projects, a clear example of how to apply some of these new technologies in a way that is actually leaps and bounds better than the older analog alternative.

With that. I'd love to hear from you. What are your thoughts on ConstitutionDAO? Do you have any questions about this project I can answer? And also, did this project introduce you to things like web 3.0 or Ethereum or tokens for the first time, or were you already familiar with these technologies? Shoot me an email to alex@morningbrew.com or DM me on Twitter @businessbarista. Also, if you haven't done so, make sure to pound subscribe on Apple Podcast, Spotify, or the podcast player of your choice. It is the number one way for this show to grow. And it's also how you find out about new content when it drops. And finally, if you did subscribe to the show already, make sure to check out Founder’s Journal content on YouTube. Go to YouTube, look up Morning Brew, click on our channel, and there you will see an entire playlist of Founder’s Journal content from why Ethereum matters, very relevant to this episode, to how I deal with imposter syndrome. As always, thank you so much for listening to Founder’s Journal and I'll catch you next episode. A big thank you to American Express Business who made today's show possible.