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What is a DAO, and Why is One Trying to Buy an NBA Team?

Decentralized autonomous organizations take venture capital to the metaverse using blockchain technology. Let’s talk about what that means — and how Jerry Krause is involved.

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What the f*** is a DAO?

It’s a common and increasingly relevant question. No, not the path of life, energy, and the universe as described by Lao Tzu and encoded in the Tao De Ching; the other one. Let’s say it all together: DECENTRALIZED AUTONOMOUS ORGANIZATION.

DAOs are investor-directed venture capital funds that leverage cryptocurrency and blockchain technology to make major investments, oftentimes faster than a traditional VC round model.

Decentralized finance startups have raised more than $10 billion this way in 2021 alone, and major mainstream VC firms like Andreesen Horowitz, Dragonfly Capital, and Kleiner Perkins have joined DAOs to fund companies in the blockchain and crypto industries. DAOs are starting to make a real-world impact, with PleasrDAO buying the only copy of Wu-Tang Clan’s 1-of-1 Once Upon a Time in Shaolin album for $4 million late last month. In June, it bought the original “Doge” meme NFT that very same $4 million sum. Another such organization, ConstitutionDAO, wants to buy the last privately-owned first-edition copy of the US Constitution.

Now, a decentralized autonomous organization known as the Krause House — named after none other than late former Chicago Bulls general manager Jerry Krause — is attempting to purchase, own, and operate an NBA team.

A group Twitter account has more than 2,000 followers, with a Discord boasting more than 1,000 members. Its founder, “Flex Chapman” — a nice nod to former NBA player and viral Twitter star Rex Chapman — told Business Insider that the group has more than 1,200 members trying to join the ultra-exclusive club of 30 NBA owners.

Plenty of sports teams are owned and operated as publicly traded companies, including soccer giants Manchester United, Juventus, and Borussia Dortmund. In the US, the Green Bay Packers have been a publicly owned non-profit company for nearly 100 years, with more than 300,000 stockholders and more coming in an upcoming stock sale, just the sixth in club history, looking to raise an additional $90 million.

But no grassroots group has looked to buy a major sports franchise in quite the same manner as the DAO-themed Krause House.

With the average NBA team valued at $2.2 billion per Forbes, it won’t just take some additional super-wealthy backers who have the funds to purchase a franchise to bring this whole thing to life, but also the willingness of the governors of enough NBA franchises to permit a company structure as unprecedented as a DAO to join their billionaire fraternity.

But make no mistake: The era of DAOs and blockchain-driven Web3 is upon us whether or not Krause House’s effort ever comes to fruition.

With that in mind, don’t be surprised (but definitely don’t be concerned) if and when one of these companies ends up buying something you love and rely on, sports team or otherwise.

Because that future is coming more quickly than you think.

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