Simone Cicero

Hello everybody, and welcome back to the Boundaryless Conversations Podcast. On this podcast, we explore the future of business models, organisations, markets and society in our rapidly changing world. I’m joined today by my usual co-host, Shruthi Prakash. Hello Shruhti.

 

Shruthi Prakash 

Hello everybody.

 

Simone Cicero

Nice to have you back. Our guests for this episode are Nicholas Naraghi and Spencer Graham, co-founders of HATS protocol, which is an emerging standard for on-chain roles, permissions, and accountability in decentralised and programmable organisations. 

 

Together, they pioneered new ways of structuring DAOs and digital native organizations, making roles programmable, modular, and resistant to capture. Nick and Spencer bring a wealth of experience from years of building DAOs, infrastructure, and governance tooling. And I think their work reflects a deep commitment to building new ways for organisations to move beyond fragile coordination towards more resilient adaptive coordination systems. 

 

We’re excited to have you here with us today. Hello, both of you.

 

Spencer 

Hello.

 

Nicholas Naraghi 

Hi, thank you so much for having us. Great to be here today.

 

Spencer 

Very excited to have this conversation.

 

Simone Cicero 

Thank you so much. OK, so I would say that as a starting point, it’s probably, since we are talking about a little bit of frontier topics, edge topics, it’s good for you guys to give a little overview of what brought you to this topic, why HATS, and also maybe give a little overview of the role of HATS in a larger ecosystem of programmable organizations, on-chain organizing as a starting point. And then we can pick it maybe from there. 

 

Nicholas Naraghi 

So yeah, how we arrived here is we were excited about this concept of DAOs many years ago, and we participated in DAOs ourselves. This idea of widely distributed ownership of shared resources and collective action. And time and time again, as we were innovating on these concepts, we ran into the same problem, which is that – without clear roles and responsibilities and a way for a DAO to actually manage that collectively without accountability for the people who are supposed to do work on behalf of the collective – there were a lot of coordination failures almost every time across the board. And HATS was born as a solution to that problem. 

 

We got started on HATS three and a half years ago. Then you know, DAOs were still very nascent. DAOs have evolved a lot, and many have failed. But we’ve sort of composted many of the learnings into something that we think is going to be really valuable for the future of work, for the future of organizations, especially in an AI native world and one where much of the world economy is operating on Ethereum rails.

 

Simone Cicero 

So typically, when we think about resources in traditional organizations, we are talking about, of course, money, but also brands, or maybe infrastructure, or other type of capabilities.

 

So I would love if you can maybe explain a bit better and more deeply what is the concept of a role in programmable organizations? So we are used to traditional organisations where roles are largely related to controlling people or controlling budgets, having commitments to the shareholders or to certain other KPIs. What does having a role mean in a programmable decentralized autonomous organization?

 

Spencer 

Something I think that we discovered sort of by accident, having created this protocol to solve the problems that Nick was just describing and others, was that we discovered that a role is not just a simple thing. It’s not just a job description. 

 

It’s actually a very rich multi-dimensional object that kind of bundles many, aspects of work or participation in an organisation or delegation from a principal to an agent. It kind of bundles many things together. And when we think about a role that way, we actually, what we get out of that is the ability to more explicitly both understand all the aspects of what a role is or what somebody is doing in an organisation or other related concepts. And we get the ability to intentionally adjust, change, design, manipulate or program all of those different dimensions. 

 

So a role that the way we have kind of learned to think about it, a role in an organization is a bundle of objectives or responsibilities or expectations or responsibilities is probably the best overall descriptor there. Plus the resources or access rights or permissions that are necessary to fulfil those responsibilities, and the qualifications or criteria that somebody needs to meet to have the role and all of the accountability criteria or mechanisms or incentives including compensation that are attached to having that role and some rules about how that role or whoever has the role is allowed to make decisions or take actions on behalf of the organization.

 

So those are very abstract concepts, but what we have sort of discovered is that they cover the whole design space of what a role is. If we think about all of those dimensions, then we can be really intentional and specific about how we design organisational structure. 

 

In this newer world of the ability to do that, using things like smart contracts, using newer AI tools, we can actually do that. And that’s become very, very exciting to us.

 

Nicholas Naraghi 

Well, I can expand on that, how to contextualise it to an organisation. And I think what we discovered is we’re working on this HATS protocol. It’s a protocol for creating roles within organisations. And what we’ve discovered recently in the research side is that in order to construct a programmable organisation, to actually take all the contracts and social agreements and access control pieces and all the things that Spencer just said are bundled into a role and actually create a language for that where the computer can understand, and it can be programmed and automated. We needed to find the primitive that could be reused and reconnected over and over again. 

 

And that’s why the HATS protocol is centred on roles or HATS.

 

What we found by approaching that is that the relationship, if you think about an organisation as a network of people and nodes, a network of agents, the relationship is that one of the most important relationships that exists is the principal agent relationship. We’re talking about principal-agent delegation, the principal-agent problem. 

 

How do we ensure that the person who’s being delegated to is aligned with the person doing the delegation? Or the agent or the collective that’s doing the delegation, that relationship is embedded in the role. 

 

So we try to think about, in the Web2 world, you have job descriptions where you’re hiring for a specific job. You’re outlining the experience that’s needed and what this person will do. A lot of that’s handled socially, some of it’s handled legally. 

 

How do we take all those pieces and put them into code? And that’s why the HATS protocol centres on the role that is the bundle of all those components.

 

Simone Cicero

That’s very interesting. know, Shruti, you have some questions, but I wanted to double down quickly on the idea of the principal-agent problem, because I believe it may be central to the conversation that we are having. So, why this problem? And maybe you can introduce this problem a little bit more and explain why.

 

It’s so important and maybe we can also try to understand why this is a problem that has emerged and is being solved now in the programmable organisation space, while in the traditional organisation space, it remains largely unsolved, I believe.

 

Spencer 

I would actually counter that a little bit. think it’s solved in some interesting ways in the Web2 or traditional organisation space. But I think it’s maybe addressed is the better term. It is addressed in ways that are kind of like running up against the limits, like hitting a frontier of what is possible for those organisations.

 

Maybe to back up a little bit, so the principal agent problem, just to kind of reintroduce it, is a problem of alignment between a principal who wants to do something, recognizes that the best mix of, like the best ROI on doing that thing is not to do it themselves, but to delegate that thing, the responsibility to do that thing to somebody else, the agent. 

 

That might be because the thing requires a lot of expertise that they themselves don’t have. That might be because doing that thing requires time that they don’t have. All sorts of reasons. Or it might just be that the agent that they can delegate to can do it much more cheaply than they can. 

 

So they’re balancing the effectiveness and cost, or return on investment or cost and benefit. But there’s also a third thing that they have to take into consideration, which is the drift in the alignment or the discrepancy in incentives or interests or values that the agent might have relative to them. 

 

And so that’s where the problem comes in, right? If there was no drift or no difference, you made a copy of yourself and let that copy do the thing that you yourself didn’t want to do, then we wouldn’t really have a principal agent problem. But all of us are different people with different values, different interests, different incentives, different kinds of life scenarios. So there rises the problem of the potential problem of alignment between the principal and the agent. And that is really kind of a challenge for the principal.

 

There’s lots of ways to protect against that sort of alignment risk. One is by getting to know the agent really well over the course of your entire life so that you can trust them because you know how they think, you know how they act, you know what their interests are and how they respond to different incentives and scenarios. 

 

A totally different way is to ask a third party to sort of enforce commitments from the agent. So this is largely what we use the legal system for in the context of organisations and corporations, and the principal agent problem is the principal, maybe it’s an organisation, sets up a legal contract with its employee that kind of describes what the employee can and cannot do and the penalties that might be enforced by the legal system if they break the agreement or the contract. 

 

And this latter thing is something that is one type of what we have come to think about, inspired by Josh Stark from the Ethereum Foundation. We have come to think about this as hardness or the expectation that something will be true or remain true or stable over time. 

 

The principal – it sort of needs some degree of hardness so that they can rely on what their agent is going to be doing. So traditional organisations address this problem with a combination of the legal system and also hiring people that they know, so that they have like a fair amount of personal trust with them. Also, sometimes just accepting some of that risk because the potential benefits are greater. 

 

But what we have sort of started to see is that that mode of solving this problem actually creates a lot of limitations because it relies on a bunch of different things that are not very scalable or not very programmable. And if we were somehow able to break out of that mode and find a different way of solving that problem that was more programmable, then organisations could scale much, much faster, or become much more cost-efficient and maybe even better at what they’re trying to do than their traditional counterparts.

 

Shruthi Prakash 

Yeah, I can just probe on that, right? So, how do you build that trust, build that buy-in? How do you essentially grow it to some form of a critical mass that therein enables this at an organisational scale? Are there any similar models, like how established legal systems or hiring people they know, etc., similar to what you mentioned?

 

How does that look in this? And why I also ask that is because one of our previous podcasts, we spoke about, let’s say, synthetic users when you do market research. And that is one way to get faster output, and speed and scale can be achieved. 

 

But in terms of just trust, it creates a deficit, essentially. So I’m curious how in systems like this, you can build trust, also get buy-in from an organisation, especially if it’s a traditional organisation that is sort of transitioning into this kind of a model.

 

Nicholas Naraghi 

Yeah, so remember here that we have this really hard design goal of taking all the primitives of forming an organisation, creating a group of people that can work well together and turning that into some sort of programmable substrate that we can use to express these organisations. That gets us the benefit of automation and reliability hardness, like Spencer just said. But actually getting to that point, very complicated because we have to translate all the concepts into code.

 

how do you actually solve the principal-agent alignment? Like Spencer’s saying, you can have a social trust or you can have some sort of enforcement. It typically we’ve done enforcement through, you know, social agreements, legal system, a boss firing somebody or having a performance review, you know, those types of things. We have this new unlock, which is that we can use code just like we can use code to enforce, loan percentage yield parameters and DeFi protocols or savings rates and things like that, we can use the same type of primitive smart contract code that’s automatically enforcing and on Ethereum, which is reliable in terms of its execution. 

 

We can use that to now enforce agreements as the sort of primitive that exists in an organization. So you can think of an organization as a network of these types of relationships, network of agreements. How do you actually express an agreement in software? Hard problem. That’s what we’re working on. And then that breaks down into these two. That gives you this dichotomy of like actual trust and then on-chain enforcement. So constraints, incentives, know, automatic payouts, and automatic slashing under certain conditions. That’s the sort of software piece. 

 

And then reputation systems, ways of measuring transitive trust between nodes, giving different-sized groups of people authority to hire or fire somebody from a specific role. That’s sort of how you handle the trust side. And the combination of those two things gets you the de-risking and reliability that’s necessary in order to make these types of agreements. 

 

And according to the theory that we’re developing around this optimisation across effectiveness, cost and hardness, you should actually be able to sort of measure each of those things depending on what is at stake, right? If I’m giving someone $50 million of the treasury assets to manage, what’s that stake versus if I give someone $10,000 to give out in grants at hackathons?

 

How much accountability we need, how much trust, how many constraints are necessary, can change dynamically based on what resources are actually at risk.

 

Spencer 

And you also asked, I’m going to sort of take a slightly different angle here. You asked about like, how organisations can build trust within themselves? And I think part of the irony of a lot of traditional organisations is that they like to talk a lot about like, we’re like, we all trust each other and like, it’s a big family and this sort of thing.

 

Fundamentally they are sort of like relying on some degree of trust because the legal system is very expensive to bring into play to actually address a lot of the potential alignment challenges. So what you have instead is these very toxic surveillance relationships between organisations and employees where, like I remember, Thinking back in my previous life when I was working in corporations, the idea that the IT department could see every button or key I was pressing and just everything on my computer was being surveilled because they don’t actually trust me. 

 

And so it creates this very counterproductive sort of relationship between the people in the organization.

 

If you don’t have to rely on that stuff, I have this hypothesis, which is backed up by some personal experience that the actual relationships between the people in the organization can be much more healthy and much more fruitful and enjoyable and life-affirming. The way I got into this space originally was, or like just started working in this space was I joined a cooperative of freelancers called Raid Guild.

 

Nick was also a part of, which is one of the ways that we met. And I remember, I didn’t really know anybody in that organization, in that community, but because of the smart contract enforced rules that were set up for the community as a DAO, it created this incredibly safe space inside the boundaries of the community where we could take risks with each other, we could try things, and because we knew that we could always, each of us individually could always sort of like leave with the resources that we put into the collective, or that if anybody was sort of abusing that space, we as a collective could decide to kick them out. 

 

And that was all enforced by our own rules that we were having coded on in smart contracts. And I fell in love with that idea. And that’s kind of what made me fall in love with DAOs and think about what organizations could be if we just found a different approach. And so all of the hardness and all of the programmable rules and the bundle of things that make up a role that we’re talking about, I feel like sometimes – it’s easy when we talk about this stuff, it’s easy for people to hear that and say, okay, so you’re just like taking all the humanity out of organizations and you’re kind of replacing the personal relationships with this sort of like computerized automation. 

 

And I think in part that’s true, but I actually think those things are not diametrically opposed. They’re actually complimentary. I think if we can, and I think this is happening more and more, if we can do this well and create real programmable organizations based on a primitive of a programmable role, we can actually improve the relationships in organizations between the people and create, and that will be yet another way that organizations can improve over time.

 

Simone Cicero 

I mean, everything this conversation is really fascinating because

 

So basically, to some extent, the idea of contracts in traditional organizations and something that resembles the idea of programmability and finality in organizations has emerged already. More recently, for example, with Haier and their experience that have inspired widely and that we have codified into the methodology we bring to the organization, which I will, let’s say, synthesize as organizations made of micro-enterprises, nodes that contract the resources with each other, investments, and create contracts to align interest that’s to saving bureaucratic management. 

So that’s one thing that has emerged already in the corporate space.

 

On the other hand, we also see research in organizational development that dates back to the work of Emery, for example, in social technical systems, which explains how clarity of rules and somehow contracts are essential to avoid dynamics where if somebody can step in and rewire the old agreements, basically you produce somehow a lasse-faire situation in the organization where nobody cares really about what gets done. Because if you can step in and cancel the agreement, that’s not really something I can trust. 

 

So let’s say that the problem has already emerged in traditional organisations. Another thing that I wanted to bring up is that you have two problems here. One is the problem of generally reducing the principal agent and the entity of the problem by essentially shortening the chains of command, distributing the ownership and the skin in the game. 

 

So when you have an organisation which is made of micro enterprises, then you basically run your own P &L, and you are, know, of course, there are some mechanisms for alignment, but you are pretty much on your own. So you reduce a lot of the information asymmetry, you reduce a lot of the, you know, the existing incentives for, you know, tricking the system, because essentially at the end of the day, the incentives of yourself are aligned with the incentives of the system. So there is no real interest in behaving in a way that tricks the, I would say, the wheel of the principle if you are an agent, because there is quite a lot of alignment. 

 

So one thing is, reducing these tensions in the organisation by design. So, designing a decentralised organisation. Maybe they don’t really have contracts, but maybe they are just agreements. But at the same time, you can design organisations where there is a lot of autonomy and skin in the game. 

 

On the other hand, of course, there is a question of how you do it, more from a technical standpoint – that I believe is where the world of DAOs has been pioneering. So paradoxically, I would say that the world of programmable organisations and DAOs has been pioneering a lot in the “how” – How we do it with programmable contracts, organisation as code. 

 

On the other hand, corporates have been dealing with this problem quite a lot. So they have been creative in creating organisational models that decentralise decision-making, but have lacked a technological implementation. 

 

The question that I want to bring up for you now it’s just to what extent we can separate these two problems, the technical implementation. The questions of finality, smart contracting, and embedding money into agreements, which is what we have on the blockchain, stem from the theoretical problem of principal-agent coordination. 

 

Is it something, you know, in a few words, is this blockchain like implementation that we are seeing really changing the landscape in a way that makes it now finally something that we can really have versus maybe, you know, the complexity that you would have if you have to do this with traditional contracts, which is, it could be probably a nightmare of bureaucratic signatures and it’s really basically impossible to do.

 

Nicholas Naraghi 

It’s a really amazing question. And one of the things that I think this gets to is like, what problem are we solving? What value are we actually driving? It gets a little bit to the bottom-up versus top top-down organisational form. So you said the word emerge, something that’s already emerging, right? That’s a bottom-up thing. I think in the Ethereum space and people have been experimenting with DAOs, there was a lot of bottoms up experimentation from here’s some primitives, here’s some new things, let’s try experiments and see what happens. 

 

But what that doesn’t really get at is the core value proposition that we can deliver. And decentralisation is really a means to an end. So we’re not focused on decentralising for decentralisation’s sake. We’re focused on creating technology that can help make things more decentralized so that they can be lower risk, get a higher hardness in the system, more predictability, less risk of assets being stolen, less risk of misalignment causing unnecessary costs. 

 

What this trilemma, the trilemma of efficiency or effectiveness, cost and hardness, really puts on the table for us is this analysis on a resource-by-resource basis, on a role-by-role basis for optimizing across those parameters. 

 

So we say, we’re going to use this as a company, we want to increase our effectiveness, we want to decrease our cost, we want to increase our profitability, we want to decrease the risk of misalignment between agents, because it supports those two things. Or because we need to supply to our customers a hard solution, also de-risk platform that doesn’t give them, that pass those risks on to them. 

 

So how are we gonna actually do that for each of these? Each team, each micro PNL, each department, each person who’s involved with the organisation. 

 

Now, our core philosophy around this trilemma is allowing us to do the analysis to say, what are the trade-offs in each territory, and how can we make the most effective trade-offs? Then we’re applying technologies to improve the trade-off space. 

 

So when we say, here’s a composable set of smart contracts in Ethereum that anyone can use a front end to easily deploy and compose with their existing systems, what we’re really saying is here’s a way to get increased hardness and lower risks at a lower cost. Previously, if you’re thinking about MakerDAO, spending tens of millions of dollars to deploy really robust contract systems and 18 multi-sigs, each doing a million dollars a quarter of expenses. All the components between those systems and how they plug into the overarching DAO, very, very, very high cost way to ship the hardness that is the de-risking factor that they were looking to solve for. 

 

Now with HATS, three, four years later, you can deploy a system that’s as complicated in a week or a month and with not very much net new code development. So the costs are significantly reduced.

 

Another example is if we take an AI agent and we put it in a role, we’re significantly reducing the costs of executing that role. The agent, based on its alignment, may present additional capture risk. It might present lower effectiveness because you may need a human in the loop to solve certain things, or it’s not quite as good as a human at getting a job done. But again, we can use the framework to analyze for a given set of resources, how can we make the best possible trade-offs here? And I think that that is really the crux of the value that these systems can bring to organizations of all kinds.

 

Simone Cicero 

That’s a very interesting point because I think we are touching, I mean, of course I want to talk about the AI, which I sense is also something you guys are working on, but more specifically, I want to ask you, or rather make a reflection on this. 

 

This reflection you made about cost. So basically, by using these tools, we reduce the cost needed to solve the principal agent problem. Imagine that if you go back to the root to solve the principal agent problem, you need a constitution, a state, legal framework, how can I say, lawyers, a legal system and so on. 

 

Of course, to a lesser extent, you need a bureaucratic system. You need the managers, need KPIs, need salaries and so on. With this, you just need software, right? Because the money is programmed into the software. The software has clear rules, clear roles. So to some extent, this is reducing a lot of the barriers to organizing. 

 

You know, yesterday we were doing another episode with Lee Bryant that probably will air before this one. And he said something very interesting. He said the platform is whatever you can automate. So essentially, by automating these systems, we are really reducing the cost of organizing. 

 

And by reducing the cost of organizing in an effective way, we are, to some extent, increasing the responsibility to organize. So now it’s much easier to organize. Why don’t we organize? Why do we still continue to work with this bureaucratic legacy, industrial systems that are not needed anymore? 

 

I mean, of course, to some extent, because maybe things don’t change from one day or another. But I find it fascinating that we are seeing a real potentially a reduction of the cost of organizing. So the question is, what kind of organizations will we see emerging from these new enablers that you guys are building? 

 

And do you have something that you want to share in terms of the feeling you have in terms of what kind of new types of organizations that can emerge enabled by these new layers of technology and platforms?

 

Spencer 

The cop-out answer is that, at least my answer is that I don’t know. But I suspect they will look very different from organisations of today and recently. I can think about a few possibilities. 

 

They will be relatively flatter in the sense of a hierarchy of what’s actually happening and the power structures. Definitely flatter from a power perspective. It’s probably somewhat flatter from a sort of task objective taxonomy kind of structure. I think they will absolutely be a lot more AI agents involved or just AI broadly.

 

But that is changing so fast and has been like accelerating and changing so much even just for the last, like every week, feels like everything changes. So it’s very difficult to predict what that looks like. But one of the things that is true about that is simultaneously reducing the cost of organizing and coordinating, like you’re saying, and increasing the amount of individual capabilities that one person can actually.

 

It can actually harness the sort of from the like size of a organizations that may exist, there’s sort of two competing forces. And so to me, it becomes very challenging to predict like what, how the balance of those forces is going to play out. 

 

One thing, though, that is obvious is that there are lots of people on their soapboxes prognosticating that everybody’s just going to be their own company and nobody’s going to be working together because individuals can just sort of do everything themselves or like with an army of AI agents. And to me, that just seems categorically not the way it’s going to go because always it’s going to be the case that people need to work together to do things, to pool their resources, to solve problems that are not achievable, even just based on having a single perspective of an individual person.

 

So we’re always going to have coordination. We’re always going to have collaboration. We’re always going to have organisations. The shape and things that those organisations are going to do. I don’t know. It’s simultaneously very exciting because we could get a lot of new stuff. And I think the work that we are doing is to try to nudge this like period of change in a direction that we think is beneficial to humanity and society, and organisations. 

 

But it’s also a little bit scary because we don’t, we really don’t know. And there are a lot of different ways that this could go.

 

Nicholas Naraghi 

There are sort of three market forces at play. One is that AI is going to automate most work. I think there’s a pretty broad consensus that like 50% plus of work in the next few years is going to get automated. In 10 years, maybe 90%. The second market dynamic is that we’re seeing the entire world adopt Ethereum Rails for the new economy.

 

Moving away from banking traditionally, moving away from Swift, everything is stablecoins right now, but that’s going to turn into the tokenisation of everything. Our WAs are getting solved, on-chain equities, the programmable money is pretty much here. 

 

The third one is that the nature of the firm says people form organisations when they can make more money together than they can as individuals. So that’s getting dispensers points like yeah, sure. Everyone can do a lot more with agents, but you can do even more when you get to create a group together. So I think the future, it did sort of go into like a prediction territory, right? I think the future looks like widely distributed ownership, so tokenisation of everything, widely distributing the ownership of those things. You know, everything that I’m participating in, everything that I’m creating value for, there’s algorithms that measure the value that I create and they reward me with ownership of those things. 

 

So now I have ownership of Apple from using Apple, you know, computer, I have ownership of Riverside for, you know, participating in a Riverside podcast. And that goes to like all the tools that I use. And then of course, like, how do you actually make decisions as a collective when that is the case, then you have the AI agents participating on my behalf. 

 

To sort of get specific with that, think like, what we could see as a sort of interim point is if you go to a cafe and you have a rewards program where you buy nine coffees and you get the 10th one free, that’s like a, that’s sort of this value creation thing. So now what if you go to the coffee shop and you actually get a little bit of equity in the coffee shop, you get a little bit of ownership in the form of a token because you went there, and that’s something that’s constantly happening. 

 

And then you have a feed of all the things, all the organisations where you’re expressing your opinion democratically actually matters. You’re participating in this sort of algorithmic governance of all the things that are around you in the world. And I think that that’s something in the next five to 10 years that the AI automation costs will sort of decrease to make that more accessible. 

 

The quality of the AI agents that can represent us in these organisations is increasing. So more of the decisions can be automated. Then obviously, like everything is tokenised and people want to spread those tokens around to create more value and align more incentives. I think that that’s a very, very interesting world to sort of solve for that is uniquely enabled by these significantly decreased costs and coordination.

 

Spencer 

All right, so if Nick is gonna make concrete predictions, I guess I sort of am shamed into doing so myself. Maybe this is a little general still, but I think everybody is sort of recognizing and experiencing the kind of degradation of nation state governance around the world. 

 

So yeah, prediction from me is that the scope of nation-state governance is going to potentially shrink considerably. And the things that nation-states no longer will be governing will be governed by autonomous decentralized organizations. 

 

And we’re already seeing this in some ways in like the big giant technology companies are almost like mini nation states on their own. Like they set rules for these huge economies that are based on their platforms, or they are like creating new intelligences inside of themselves. And nation states are really like, they like to try to impose their will on those companies, but those companies are bigger than any nation state in some important sense. 

 

And so they can’t be like controlled by any given nation state. So instead, what I think, and this is really a hope as well, what I think and hope will happen is that we will find the right ways to govern those big technology platforms and a lot of other things that emerge that are sort of cross nation states, cross legal entities – like public goods kind of things, we will find the right ways to govern and produce and create and continue to like make those things more valuable without also putting the power over them into like one person’s hand or like into Sam Altman or into Mark Zuckerberg or into just like the largest shareholders of Microsoft or something like that.

 

I think organizations are going to get good enough and with the ability to decentralize the power and ownership over them, that we’ll be able to govern them effectively while retaining the value that they create to society without needing the sort of beleaguered nation states to do that job for us.

 

Simone Cicero 

Which they failed to do so hopefully we can find another way to do it.

 

Nicholas Naraghi

Not hopefully, we have to and we must do it.

 

Simone Cicero 

I mean, this is an extremely fascinating conversation and I know Shruthi has some closing points, a closing question, but I want to touch on some of the things.

 

So first of all, think when you said it’s scary, if I remember, some of you said that it’s a scary perspective. I think it’s scary because it’s essentially unpredictable and we don’t know what’s going to happen. So essentially, now we’re living in the context of bureaucratic organizations, regulated environments and you know, predicted paths, a society where we have, you know, life is more or less predictable, right? In terms of roles you can play in a largely, you know, predictable society. 

 

As we move ahead and we, let’s say, fragment this responsibility to organise much more widely, I think on one side we’re scared because we don’t know what’s going to happen. We don’t know, for example, when you say – we’re going to participate to economies in different contexts, like the platforms, the systems we contribute. That’s extremely less predictable from a perspective of understanding, for example, how much I will make in my life, or  can I fulfill my needs. It’s much more something that you always have to, more entrepreneurial to some extent, more entrepreneurial, right?

 

So it’s inherently scarier for people. And it’s also a bit scary because, I think what we said before, right? It’s a responsibility to choose what you want to do, where you want to contribute with what, and probably you cannot leave your organisational contributional life – just by purchasing the coffee at the shop. 

 

You actually have to think about something more ambitious, like organising your community needs, or maybe creating radically new technologies for solving some environmental issues or solving some coordination issues that exist in the world. So it’s not just about sipping coffee and participating in podcasts, right? It’s going to be much more about actually organized impactful systems that are going to solve the problems that governments are not solving. 

 

And by the way, it’s funny that we are having this conversation in the week that the US government shut down. 

 

Finally, last bit, I think it’s extremely interesting to see how these frameworks can really represent a place, a space for, or a technology to integrate agents. Another very important thing you said – we’re entering an age of AI-based contributions in organisations. And one of the major problems we had so far with AI is that it’s scarcely observable, scarcely drivable, I would say. So it’s really difficult to tell them what to do. 

 

And so the role frameworks, for example, that you are building are able to create the constraints to get agents to participate to the organisational life without giving them full uncontrolled space for impacting. So you have a role. You can execute inside that role. You have certain constraints. You to save guard. So I think it may be really something that unlocks the next generation of organisational evolution, which is most likely it’s gonna be a machine-human interaction space, right? So, I mean, I guess, you know, it’s a bit of a longer final remark, but I think it was important to touch on some of the things we said.

 

Nicholas Naraghi

There’s a theme across all three or four points that you made there, which is the uncertainty. There’s uncertainty about what someone is going to do if you give them some autonomy. And then there is the constraints to make sure that certain things that they don’t do. There’s uncertainty about the way that a bottoms up organization, know, emergent, know, emergent coordination will go relative to a top down command and contro structure.

 

There’s uncertainty about how I will get my needs met when I participate in these new types of economies. There’s uncertainty about how much work AI will be able to automate. And I think one of the things that we learned when we were working with our Proto DAO was advancing the developmental capacity of the individuals who are involved to be more communicative with one another, more honest with themselves and therefore with each other. 

 

And also more capable of sitting with the uncertainty, actually, the nervous system training that’s necessary to say, I’m not sure what’s going to happen and I’m okay. And actually, that’s where all the magic comes in. 

 

When we have some useful constraints, some from a complexity science perspective, from some great initial starting conditions, and then all the magic, all the good things really come through the tension that’s held to allow the uncertainty to unfold. I think that that is at the highest abstraction, that is maybe one of the major paradigm shifts that we’re undergoing here as a society, as organisations, and as individuals – sort of evolving into the network economy that we’re now.

 

Shruthi Prakash

I was going to actually just ask on that, that does organising itself therein become a required skill for people to learn and sort of get comfortable with, – where, you know, the learning curve might be steep with conversations like this. So how does that sort of look? Even though, let’s say, setup and coordination cost might be low and affordable in terms of barrier to entry in this case, but organizing as a skill therein becomes more important across the organization. So that was one point. 

 

And second, just as a closing, wanted to ask, do you think that because now organizing will become more, let’s say, accessible in some way, do you think people or participants are going to test and play faster and cheaper and sort of fail fast and fail cheap or you know, even in organizing? 

 

Earlier saw that only in like building products, things like that. So do you think those kinds of concepts are now also going to shift into the organisation design part of it, where autonomy is handed over to people as well?

 

Spencer 

I think so. not sure it will be… It’s an interesting comparison that you’re inviting between sort of experimentation in technology and experimentation in how people organize and coordinate. I suspect that there’s some overlap between the two, but there’s enough differences where maybe we won’t get the same kind of like explosion in at the same magnitude of experimentation in organizing just because there’s humans involved and that comes with some like there’s some like gravity there or maybe a little bit of it. It’s a coordination challenge. 

 

But reducing the coordination cost, I think will definitely increase the amount of types and ways to organize and therefore I think there will be more experimentation especially if we are able, we sort of collectively, this space generally is able to create a lot of reusable templates and sort of primitives that people can piece together as Lego blocks and play in that sense and sort of find out what works.

 

Simone Cicero 

I think again, this last fascinating point of templating, I think it’s also something that is worth underlying before we move into the background. But essentially, when you say, when you speak about developing these languages that allow then the possibility to share templates, to share approaches to organizing, I think this is another very powerful force that we are going to see in the organizing world in terms of rapidly getting people to converge and to be able to organize much more beyond borders and much more horizontally across the world. 

 

And also we see people starting to speak the same language will be useful also to reduce the barriers to multi-organizational agreements. So I’m really looking forward to see how this play out because it’s going to be very important to solve the incredibly challenging problems we have. So I think that’s another very important point to underline.

 

Shruthi Prakash

Awesome. So, towards the end of our podcast, we have a section called as the Breadcrumbs, where we request our guests to maybe share books, podcasts, any inspirations that they take, you know, your learning journey, maybe how do you keep yourself sort of engaged that all listeners can also, you know, look into.

 

Spencer 

So I’ve been thinking about this and there’s a lot that I could say, but I think there are three things that maybe are like a representative set for me. So maybe going in reverse chronological order of publication. I mentioned Josh Stark and where we got the sort of were inspired about hardness. That comes from the article that he wrote called, Atoms, Institutions and Blockchains, which introduces this concept. It’s super phenomenal article that they’re really cleanly, describes, the sort of the, the, the why and the how of some of this stuff. 

 

The other one, and I realized I might be stealing from, from Nick here, but I’m going first. So, he’ll have to come up with something new is, Meditations on Moloch from Slate Star Codex. It’s been 10 years, something like that, since it was published. every time, maybe I’ve read it a few times, and every time I go back and read it, I sort of am like reinvigorated about the broad problems that we need to solve as humanity, as society, and like why working on organizations is so meaningful to me and so important.

 

And then the third one is a little bit older. It’s a book by Richard Dawkins called The Selfish Gene. And I think some people may have heard of it, but that book sort of explores the, almost like explores the world from the perspective of like the most atomic unit of life, which is the, well, one way to think about – that is the one gene inside of our DNA or other animals. His perspective on or ability to think about the smallest possible unit and how it relates to all the other units in the world around it. And from those relationships emerges this incredibly beautiful and challenging and scary and fascinating structure in the world was very inspirational and kind of educational to me in terms of how I think about the world and how to sort of understand what’s happening around us. 

 

And so there’s a very strong through line from that type of thinking to thinking about organisations as collections of atomic units that are roles. So I found a lot of inspiration from The Selfish Gene.

 

Nicholas Naraghi 

Yeah. Plus one on Meditations on Moloch, of course. You, in order to work on this problem, you need to fundamentally understand the downward spiral that capitalism causes. And while it creates many good things, it has one bad thing that it keeps doing repeatedly. And Meditations on Moloch illustrates that really beautifully. It’s given us a lot of clarity on how to think about the problem so that we can solve it. 

 

Go back and read the original DAO white paper, the Vitalik’s blog post about DAOs, DAs and DACs, which is just, you can just get this like pure sort of unadulterated version of some of the concepts. Ethereum’s Dark Forest article from Dan and Georgios explains also the nature of like Ethereum as a purely adversarial place and like what is the encoded constraints only version of the game theory look like. 

 

And then also Ethereum is game changer technology literally by Virgil Griffith. Talks about how when you’re building up from the dark forest and you want to use smart contracts to actually change game theory, how beneficial that is where you can literally encode different incentives and disincentives into the game theory to change the game. 

 

I think those sort of give you the building blocks to look at how do you use smart contracts on Ethereum to start to build agreements so that we can create a new form of organisation. And then you can sort of contextualise all the things we talked about in the protocol and the trilemma optimisations based on that.

 

Shruthi Prakash 

Thank you.

 

Simone Cicero 

Thank you so much. So I mean, guys, thank you a lot. I think it was a very interesting conversation. I have a bunch of notes that I want to go back to. I feel like this is a great material for further writing and research. And looking forward to what’s happening with the HATS. Looking forward to your next steps.

 

I hope you also enjoyed the conversation.

 

Spencer 

Absolutely. Thank you so much.

 

Nicholas Naraghi 

Thank you for having us. This was super fun. Very exciting.

 

Simone Cicero

And thank you, Shruthi, of course, for your always great questions.

 

Shruthi Prakash 

Thank you. Thank you, Nicholas. Thank you, Spencer. Thanks a lot.

 

Simone Cicero

And for our listeners, of course, like always, can head to boundaryless.io/resources/podcast where you can find the episode in the homepage or where, of course, you will find all the links to the resources that our guests for today have mentioned in the conversation. 

 

And of course, until we speak again, remember to think Boundaryless.