Running a decentralized organization just got easier
Utopia Labs brings payroll and payment-management tools to crypto-native DAOs.
In the seemingly endless hype-cycles of crypto and NFTs, it’s easy to lose sight of how innovative blockchain technology truly is. Forget pictures of apes and whether Dogecoin will get to the moon – blockchains, and the transparent ledger they create, could transform many of the industries we take for granted. Healthcare, insurance, voting, welfare benefits, housing ownership, and more can all be reconfigured with the technology. Put simply, blockchain has the potential to reshape the governance of societies.
That’s what piqued the interest of Kaito Cunningham, CEO and co-founder of Utopia Labs. During his time at Simon Fraser University, the then-student started researching DAOs, or decentralized autonomous organizations. Joining forces with co-founders Jason Chong – who was then attending UBC – and Pryce Adade-Yebesi and Alexander Wu, the Vancouver native built Utopia with new governance structures in mind.
“I think the key thing with a lot of people in crypto, or a lot of people maybe on the outside of crypto, is thinking that it’s just a financial speculative asset,” Cunningham tells Vancouver Tech Journal. “But especially within the area of governance, it's a really, really interesting case study. So I dug in there, and thought that DAOs were a really cool experiment towards this idea of on-chain organization, and how governance works.”
DAOs are member-owned communities that use blockchains and less-centralized leadership to move toward their goals. Decentralized autonomy works great in theory – DAOs don’t have a traditional organizational hierarchy, and can be governed as a true democracy – but in practice, it can mean that decisions take a long time, which can make it difficult to run a functioning company. Utopia Labs brings back-office tools to these organizations, by centralizing operations like payroll and payments.
“We found that payroll – that paying people on-chain, as a crypto-native internet team that's decentralized – was annoying and difficult,” says Cunningham. “And we thought that instead of using Google Sheets, which is basically saying, ‘Hey, here's how much we should pay them, this is the amount, this is the type of token that we should pay them in’ – all those things should just be in some sort of great UI and software layer. So really, that's what we've been doing. We've been focusing and facilitating payroll for a lot of these crypto-native teams on-chain.”
As well as automated payroll, Utopia offers a way to manage expenses; organize contributors and their compensation; batch-execute transactions without paying gas fees (the cost to process a transaction on the Ethereum blockchain); and are piloting ways to ensure compliance, including tax withholdings at the local, state, and federal levels in tens of thousands of jurisdictions. More than 100 DAOs now use Utopia Labs’ software to run their payments.
That number has the potential to rise significantly. DAOs have seen huge growth over the past year as an alternative governance structure to traditional LPs or C-Corporations. Axios suggests that DeepDAO.io, an analytics platform, estimates the number of organizations as more than 4,800, with around USD $10 billion sitting in treasury (a number made even more significant by the current state of the crypto markets). Cunningham cites case studies of traditional companies that are switching over to the DAO model, despite the potential legal and organizational constraints.
“The reason why us co-founders got into DAOs initially was that there's a really valuable alignment of this idea of participating in some sort of network-based economy, in which, when you provide value, you own part of the network itself,” Cunningham says. “The beautiful thing about DAOs and tokens is that it revolutionizes this idea of ownership. It allows more people to basically participate where typically there's been some sort of extractive value capture model. If you're hiring a contractor, you usually pay them in some sort of fiat-based currency, which is totally cool. But what's really cool with DAOs is that you're able to participate and you're able to earn ownership of the actual network in and of itself.”
Utopia’s co-founders aren’t the only people who believe in their software and vision for DAOs. Last month, the SFU-grad announced that the company had raised USD $23 million in Series A funding, led by Paradigm and including financing from Coinbase Ventures, Circle Ventures, and billion-dollar HR platform Gusto. That money comes on top of the $1.5 million raised in October last year in a round led by Kindred Ventures. Not bad, especially considering that all four co-founders are still under 25.
“The way we're thinking about allocating capital is two things,” Cunningham says of the investment. “One is hiring the best of the best. And that [the financing] has really given us the breathing room to be able to do that. Two is taking extremely big bets from a product and an infrastructure angle. The way we think about this is that instead of necessarily tackling the existing DAO market, [determining] how do we actually grow the market in and of itself? Those are some of the questions that we're trying to ask ourselves and really thinking about the big picture, because, again, DAOs today are not going to be what DAOs look like in three to five years.
“We were able to time the market relatively well,” he concludes. “So we're in a really great position to just be heads down thinking about these things, and just differentiating the signal and noise out there.”
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