Conflicts of interest and how we manage them

I have recently been asked about my thoughts on potential conflicts of interest with regard to others.

This is something I’ve been thinking about for a while and I have come to the (somewhat uncomfortable) conclusion that I do have a deep-seated problem with the whole issue aaround conflict of interest within an open community like INDEXcoop.

DAO’s are complex and still evolving as we speak, people from all walks of life are called to them and want to get involved. As we wish to build relationships with other organisations it’s inevitable that members will become involved in groups that have the potential for competing interests.

Even so, such links can only strengthen ourselves and our relationships.


So, what’s MY problem? (and it is mine)

I don’t have a problem with others who seek to make a profit from their relationship with me (or INDEXcoop), whether by mutually beneficial arrangements or by trying to exploit us due to the incentives they face (although I will fight against the latter).

My challenge is when it comes to people who (I believe) face competing interests which include building the coop and trying to exploit us for their / a 3rd party’s benefit. I find it, particularly when an open organisation is interacting with a closed one.

When I’m faced with someone who I believe is in such a position, I react in a number of ways:

  • I feel stress
  • I don’t want to engage with that person
  • I don’t want to trust that person
  • I don’t want to collaborate with that person (on that topic, or any other)
  • I don’t want to share my knowledge with them.

I think these are pretty normal reactions, understandable (particularly for someone like me who prefers to avoid conflict) and I’m normally pretty happy to take a step back / avoid (and go and play with a spreadsheet…).


So, why is this a problem for the coop?

Firstly, I’m fairly senior in the coop, and as such, I have a responsibility to stand up for what I believe is best for the coop and INDEX holders. So, my avoiding conflict is a net bad thing for the coop.

I would like to apologise to those people where I have failed in my responsibility to the coop to engage, and the inevitable frustrations this has caused them.

Secondly, I don’t think I’m the only one.

I think that others within the coop feel similar:

  • Stress
  • Unengaged from important conversations
  • A lack of trust with fellow contributors

This means that some things don’t happen, or the coop’s interests are overrun due to the absence of engagement, or people who should be involved in critical cross-functional discussions are omitted.

This is something we need to be thinking about and discussing.


Conflict of interest disclosures

Myself, David and Llama have all made disclosures or statements.

To some extent, I would expect that every active contributor has other interests that may conflict with the coops long term goals at some point or other. However, for many, they are so insignificant that formal disclosure is disproportionate.

Others (as above) have conflicts that they have disclosed and everyone at least understands.

Some community members have refused to make a disclosure in the absence of a coop policy that requires it.

So, do we need a conflict of interest policy?

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Indeed, that is normal. However, mostly bad for your health too. I usually keep that open for a day and respond then. I see an additional possible reaction here: resignation or not contributing.

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@scott_lew_is made some interesting points in the discord:

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Thanks for raising @overanalyser . A unique aspect of DAOs is that they require a high degree of self-policing for these kinds of issues. That kind of self-policing is hard to get right, especially when there is no template or examples to follow!

I am strongly in support of developing a template for conflict of interest disclosure and some loose guidelines for when an individual should feel compelled to make one.

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This is currently being thought of and discussed for sure. Tagging the following for visibility;
@Pepperoni_Joe , @iluscavia , @helmass , @Vanita , @0xMitz , @nic , @MaryQ.

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I’ve been thinking a bit about this lately. It looks like a can of worms that needs to be open at some point.

My biggest concerns are contributing, information availability and ownership.

  • Contributing: If a contributor does a great job setting up the Notion pages for a WG (it could be impression mining, design, whatever), he could go to the next DAO and get rewarded to do the same. What happens if he just copy/pastes our whole setup in which many people contributed? What happens if he does that in a competing DAO? What happens if we consider the Notion setup a competitive advantage? I believe that more and more DAOs will do this kind of horizontal work across other DAOs, how do we avoid conflicts then? What if they are private companies instead of DAOs? This is a just simple case and there are many levels of conflict that can occur with many nuances.

  • Information: Our calls are open to everyone and a lot of information is public. This is really helpful to enable contributors to understand context and go make the most impact. But it is also available for competing products and other organization/people that have conflicting interests. I’m not sure how to measure the risk of this and whether we should do something about it (tiering access rights?), but any restriction would probably hurt the information flow to the people that should get it. In case we restrict it, this could be a different policy on information management across Index and contributors could opt-out of access to information if they think there is a conflict (while potentially contributing to other areas where there is no conflict).

  • Ownership: Owning tokens that may present a conflict of interest. This sounds simple but I have a lot of doubts on what should be ok or not. @overanalyser mentioned in his disclosure that he has some $DOUGH, you could argue it’s a competitor but one could also argue that it is fairly different even if it is in the same category. I believe that quantities might also be important: if “some DOUGH” is, say, 1M or if it’s twice the amount of INDEX he holds… that might be a problem. This brings me to the next point

Finally, how do we check all this? Disclosing ownership of tokens, contribution to other DAOS… It’s a lot to ask. I wouldn’t like to have people create another profile to go anonymous just because they are not comfortable with the disclosures. Likewise I wouldn’t like contributors that prefer to be anonymous disclose an uncomfortable amount of information to comply with this. So I guess the only choice here is to do it through honor code.

I wish I could offer more answers instead of more questions here. This is a complicated topic and we are probably pioneering the discussion at this scale but I agree, we need a conflict of interest policy. I think it needs to start very simple (maybe as a loose framework) and develop over time.