Dropping Out and Cashing In: The Rise of DAOHQ



Lucas Chu and Emmet Halm, Harvard drop-outs and founders of crypto startup DAOHQ, see themselves as part of a new vanguard of anti-institutional entrepreneurs. But have they really distanced themselves from the institutions they critique?



{shortcode-3b452811d999063de2fc85959951b49ee38bd334}

{shortcode-c8a8e1e18f9a9d014325666244a0c52324a6436c}

It’s all but impossible to talk to Lucas Chu and Emmet A. Halm at the same time. During our last attempt at a joint conversation — a Zoom call on Halloween — Lucas was in Lisbon for a cryptocurrency conference, Emmet was in Los Angeles, and we were in Cambridge. Understandably, Lucas bungled the time zones and missed our call.

Lucas and Emmet, both 21, have been traveling the world ever since they “dropped out” of Harvard last winter to build their startup, DAOHQ — though, as they both tell us, no one ever really drops out of Harvard; they are both technically on indefinite leave. By the end of last spring, they had raised $1.3 million in pre-seed funding for DAOHQ. Mark Cuban was among their investors.

Hundreds of DAOs are launched every week, and the market is worth billions of dollars. A DAO — which stands for decentralized autonomous organization — is an online group that makes decisions collectively, without a central authority. DAOs are like companies, but all DAO members are equal, and all decisions are programmed in computer code called smart contracts.

Emmet and Lucas saw a problem within the DAO landscape. Aside from coming across a DAO on Twitter or seeing it mentioned on a Discord server, it is hard to find, evaluate, and invest in DAOs. This is where DAOHQ — a marketplace for DAOs that aggregates and standardizes them in a directory for users to browse — comes in. By streamlining DAOs and making them more accessible, DAOHQ envisions a world economy where anyone — regardless of their race, their education, their nationality, their gender — can have a stake.

Their idea was innovative enough to impress several high-profile investors. “Emmet and Lucas blew my mind and it was a no-brainer to invest,” unicorn entrepreneur and angel investor Andres Bilbao told Forbes for a profile of DAOHQ that came out in April.

DAOHQ and its investors are part of a brave-ish, new-ish world of decentralization — a much-contested alternative to traditional finance that some herald as the future of a more democratic economic order and others see as a fraudulent, speculative craze.

DAOs run on cryptocurrency, a digital financial medium that removes the third party (banks and governments). Cryptocurrencies rely on digital transactions that are protected with cryptography and decentralization. They use blockchain technology, a public ledger on a network distributed across computers. (This means that all users can see all transactions.) By eliminating the third party and providing security and transparency, crypto, its supporters argue, is a solution to the distrust that has pervaded financial institutions since the 2008 recession and Occupy Wall Street movement.

Emmet emphasizes how cryptocurrency reverses the barrier to entry typical of financial institutions. Traditional banks require accreditation, and place limits on how and when people can invest, Emmet says, “versus crypto, you just do whatever you want.”

But without the stability of centralized institutions, cryptocurrency has seen dramatic booms and busts in its barely decadal life span: The market was worth a staggering $3 trillion in 2021, before $2 trillion were erased in a crash this past summer.

Lucas and Emmet see themselves as part of a new vanguard of entrepreneurs entering this uncertain space. They present themselves as distinct from the familiar archetype of the elite college drop-out turned wunderkind entrepreneur, modeled and tainted by people like Mark Zuckerberg and Elizabeth Holmes. In dropping out to pursue a cryptocurrency-dependent start-up, Emmet and Lucas have exited institutions twice-over: they’ve left both Harvard and the realm of traditional finance.

{shortcode-d29a053a00dc8ed84f0291a5cd4cb090048c56e8}

We met with Lucas and Emmet through the fall as they embarked on their second round of fundraising. Along the way, we spoke with other young entrepreneurs, professors, high school students, Harvard Innovation Lab members, and investors in an attempt to understand what Lucas and Emmet are doing, how and why they’re doing it, and what’s at stake.

We also visited the first “Dropout House,” where Lucas and Emmet crash periodically with a group of other drop-out (or drop-out adjacent) entrepreneurs in Somerville. More such Dropout Houses are on the way. As the website for dropout.club, a network of dropout community houses Lucas is trying to found, reads: “Whether they help start a new country like Alexander Hamilton or save the rap game like Kanye West, dropouts change the world.”

“'I’m free from ‘Daddy Harvard’ and ‘Daddy McKinsey,’” Emmet says. “I'm in control of my own fate, and it could blow up. It could blow up and go up, it could blow up and go down. But I'm just here relying on my skills and not relying on other people or institutions. I think a lot of that's the crypto ethos as well.”

But Emmet makes sure to mention that the “value-add” in taking a leave — his sentences are often peppered with this pseudo-economic language — is the pride. There is pride, he says, in taking a pause to pursue something you care about. Implicit in this sentiment is the contrarian notion that everyone else, especially everyone else at Harvard, is not doing this.

Emmet smiles. “It's almost like, the prestige of turning down the prestige is higher than the prestige itself.”

‘Ideating’ and ‘Globalizing’

This isn’t Lucas Chu’s first time dropping out. He actually dropped out of middle school, he says.

We’re walking around the glass flowers exhibit in the Harvard Museum of Natural History, which Lucas chose because he wanted to do our interview somewhere he had never been. It’s early September, and our first time meeting. He was hard to pin to a time and place, changing both last minute, and arriving more than half an hour late. As we roam around the gallery, he recounts his peripatetic childhood, split between continents and schools. He talks quickly and jumps between topics.

He was born in Germany, then moved with his family to New York, primarily for the school system. But he dropped out at age 11 to pursue crypto mining “full time” after discovering it online, he says. (“The legendary story is that Lucas installed Bitcoin miners on the school computers,” Emmet tells us later. “It’s a good origin story.”)

Lucas’s parents were not thrilled. After that truancy episode, they sent him to Fordham Preparatory School, a Catholic all boys’ school in the Bronx, where he thrived: He served as student government president, volunteered at Habitat for Humanity, became a Cadet Captain in the Civil Air Patrol, and raised tens of thousands of dollars for charities including UNICEF and various cancer organizations.

He entered Harvard in fall 2019, as part of the class of 2023. As his online presence attests, he was very busy in his first few years: His Instagram bio reads that he’s “founded a dozen non-profits,” and he claims on his website, a Harvard scholar address, that in the 2020-2021 year he took 20 courses and worked on over 20 research projects. Much of his nonprofit work, he says later, is under his umbrella organization Erevna, and was facilitated by Discord channels that he had registered as 501c(3)s.

One of his projects was the Coronavirus Visualization Team, an organization Lucas founded in the spring of 2020, soon after Harvard students were sent home by the Covid-19 pandemic. CVT creates projects and graphics to illustrate impacts of Covid-19. A number of high schoolers joined CVT hoping to do meaningful Covid-19 work. Rachel Kurapati, a senior at Redmond High School in Washington, says CVT is “definitely something [she’s] highlighting” in her early application to Harvard.

{shortcode-2b23e965795fa5ed0386612de5bedc43832a3977}

Before he dropped out, Lucas took a broad range of courses: intermediate poetry, a seminar on the Harvard Forest, a course on managing existential risk. His schedule required a liberal approach to Harvard guidelines. “At Harvard, there’s no real ‘no.’ If you're a student, you can't cross register at [Harvard Business School]. But I just did anyway,” he says.

Through his academic and extracurricular work, he was always trying to organize groups of people, he says. “I realized that there's billions of people out there, literally… and so the question is, how do we bring them together? How do you globalize effectively?”

***

Emmet sips coffee from a small teacup. He has his coffee with coconut oil and a square of dark chocolate. We’re on Zoom for our first conversation; it’s morning for him in Seoul, South Korea.

Emmet, who’s originally from Dallas, went to a Catholic high school (like Lucas), where he power-lifted and played varsity water polo. He was admitted to Harvard’s class of 2023. As a freshman and prospective History concentrator, he took intensive Russian, spent time at the Harvard Institute of Politics in discussion and research groups, and wrote articles on issues of national security for the Harvard Political Review. He also joined the Negotiation Task Force at Harvard’s Davis Center for Russian and Eurasian Studies, a group that works towards solutions for Euro-Atlantic and Euruasion security challenges.

Covid-19 sent all students home in spring of 2020, but Emmet didn’t return the following fall. He took a gap year instead. It was during that time that he caught the entrepreneurial bug, starting Acceptitas, an education technology company that helps students build passion projects in order to get into top universities.

“Through that, I found company building is what I like to do,” he says. “It's where I am at my best. It’s super energizing, and it's where I feel I can make the most impact.”

Emmet came back to campus in Fall 2021, still working on Accepitas. Back at school, he dabbled in real estate, leasing a Somerville apartment and renting it out to short term tenants. He also started writing for the Harvard Lampoon, a semi-secret Sorrento Square social organization that used to occasionally publish a so-called humor magazine. In his Instagram bio, he describes himself as a weight-lifting, rooftop-DJing entrepreneur.

{shortcode-58ebe5cfab0d5d45bc0fd96e2ead1e39753f25ed}

Emmet emphasizes Harvard’s “very, very positive” role in his personal growth. He took a course on startups and networked with entrepreneurs coming through campus. He cites Classical Chinese and Ethical Political Theory, taught by philosophy professor Michael J. Puett, as having changed his life. This course introduced Emmet to the concept of energies — what gives and what takes away.

“What was giving me energy was working on these businesses and thinking about new ideas and pursuing large problems with really cool people,” Emmet says. “Writing essays was taking energy away.”

The summer before, Emmet also worked as an intern at an IT consulting firm in D.C., and realized quickly he never wanted to work for anybody again. “I was just doing meaningless work for someone,” he explains later. “I know I would work harder for myself than I would for anyone else.”

So he turned to a budding interest that he had been nurturing for the past year: crypto.

Emmet sat in his Harvard dorm “ideating.” He was intrigued by a niche crypto use case called a DAO, or a decentralized autonomous organization.

To better understand how a DAO works, the YouTube channel Cryptomatics offers a helpful hypothetical: Imagine you want to buy a house. You’d have to take out a loan from the bank, but that’s not ideal. So instead, you pitch in with your friends and together you buy a house, of which you are all the owners. Someone washes the dishes, another person cooks, another decorates. You all run it together, and no changes — financial or otherwise — can be made without the consent of everybody in the house.

In a DAO, you may not even know the names of the people in your “house,” or where they are, or what they look like. But the theory is relatively simple — those with greater stakes in DAOs will be incentivized to make better decisions. It’s an independent body where the leaders are on the same plane as the members because they are the members. What makes DAOs special is that they can function in a way that doesn’t rely on bureaucracy or external leadership, and that transactions are all immediately traceable through blockchain.

“It’s a really cool, new way of organizing people and money on the internet,” Emmet says. “And I thought, ‘Wow, this is a very interesting idea.’”

DAOHQ is Born

Lucas and Emmet first met back in 2019, when they had both participated in an eerily prescient simulation of the Russian invasion of Ukraine while working at the Davis Center. They reconnected last fall at a party hosted by Lucas’s roommates — about five or six people, Emmet says, making sushi together in a DeWolfe dorm room.

Emmet approached first, Lucas says.

“Honestly, what happened is he was looking for a co-founder. And so he asked his friends, ‘Who's the smartest person you know?’ And then I guess I came up a bunch of times,” Lucas says. (Emmet corroborates this on a later phone call — “Lucas is the Elon of our grade,” he says.)

They agreed to meet at Blue Bottle Coffee. Emmet suggested it for its proximity to the Lampoon, where he was spending much of his time. They grabbed matcha lattes, then sat at the counter bench for an hour and shared their ideas for Web3 (a catch-all encompassing blockchain, decentralization, and tokens).

“Why is there no Coinbase or OpenSea for DAOs?” Lucas recalls asking. Coinbase is a platform for buying, selling, and storing cryptocurrencies; OpenSea, similarly, is a marketplace for Non-Fungible Tokens. The idea, then, was to make a comparable platform for DAOs.

“Why is there no one aggregator for anyone — from my professor to someone on the street — to be able to be a part of this revolution?” Lucas says.

In our separate conversations, both Lucas and Emmet claim the big idea, this next step of the revolution. Lucas says “I had this idea for the last decade,” while Emmet says “A marketplace for DAOs was my idea.” In a final conversation, they somewhat reconcile this — Lucas “had been thinking about it,” but they agree Emmet pitched it. Regardless, DAOHQ emerged, as did a new partnership between Lucas and Emmet.

DAOHQ is “the one-stop-shop to find, invest, and vote in extraordinary DAOs,” reads its interactive website. “We’re looking for bright, ambitious minds to become a part of history.”

During winter break in 2020, the duo “grinded,” as Emmet puts it. If they could make “significant traction or get funding,” they’d take an indefinite leave, he recalls thinking. Emmet was learning Italian at the time, and would be in Milan from the end of December until late January, while Lucas was at home in New York. Emmet came back to campus the last week of January, but asked to take a leave in the first weeks of the semester. Lucas didn’t officially take a leave until March — he just wasn’t going to class. As Emmet puts it, they were both “all in.”

So DAOHQ was forged somewhere between Milan and Cambridge, New York and eventually Miami. Inherent in this beginning is the global intellectualism so foundational to Lucas and Emmet’s operations. If you are smart, you can be smart anywhere, and the world is not that big — not really.

***

The money came fast — a lot of it.

In January, soon after DAOHQ was formed, Lucas had a call to “catch up” with an old acquaintance — Dean Thomas, the CEO of Stealth Capital, a venture capital firm. They had met way back in 2013, when Lucas first became involved in crypto.

Lucas invited Emmet to join the call, and they ended up pitching DAOHQ to Thomas. He was receptive to the idea, and after some “due diligence,” offered the pair $200,000, according to Lucas.

“We are very proud to back Emmet and Lucas alongside Mark Cuban as the earliest checks in their entrepreneurial journey,” Thomas wrote in an email. “The DAOHQ team is tackling a difficult problem, but after working with them and experiencing their domain knowledge first hand, we’re confident in our investment into DAOHQ.”

We press Lucas on this — why would someone he met once, almost a decade ago, invest hundreds of thousands of dollars after just one meeting? How did he even meet Thomas?

Lucas hedges a bit. “It’s kind of embarrassing. He worked as an intern for my mom, basically,” he says, adding that his mom “was a banker.” When Lucas met Thomas back in 2013, it wasn’t at a crypto meeting — it was at a “kickback” after Thomas’s summer internship.

For the rest of their early fundraising, they kept it “casual,” asking for money from just “friends and family,” Lucas says. They raised $800,000 in “a few days.”

After a pause, Lucas amends slightly: “More like friends of friends.” DAOHQ rode an investment wave: According to Reuters, total global investment into cryptocurrency hit $9.3 billion in 2021, up from $5.6 billion in 2020.

According to Bruce Schneier, a cryptographer and current fellow at the Berkman Klein Center for Internet and Society, this mass influx of capital is a “speculative bubble,” as he wrote in an email. “There’s an enormous amount of hype. So even the stupidest things would get funding if they used the word ‘blockchain.’ It's kind of embarrassing, really.”

Other student entrepreneurs corroborate the ease of fundraising this time last year. Jeffrey G. Wang ’25 founded another online marketplace, Quidio.co, last year, and interned at Rift Finance, which he witnessed raise $18 million in its Series A fundraising round.

“The traditional VC world is known for throwing around money. The crypto VC world is even worse,” Wang says. “The start-up founders I worked with were like, ‘Yeah, if you want to make a blockchain startup you should just do it now. You can raise a million dollars if you have enough key words in it.’”

In January, Lucas and Emmet moved beyond their personal networks and started cold emailing investors — including Mark Cuban, whose investment would prove an inflection point for DAOHQ. In their pitch to Cuban, Lucas and Emmet capitalized on the Harvard dropout image. “It doesn't hurt that we're saying that we're Harvard dropouts, trying to build the OpenSea for DAOs,” Lucas says.

The pitch worked: Cuban invested some amount less than $500,000 into the company. (Lucas and Emmet did not disclose a more precise range.)

We reached out to Cuban to ask about his confidence in his investment amid criticisms of crypto volatility and speculation. “Not everyone is capable of separating the signal from the noise. The speculation is just noise,” he wrote in an email. “From stocks to baubles. Speculation has always been a popular sport.”

Indeed, there is “plenty” of value in crypto for investors, Cuban maintains, adding a piece of advice: “A simple rule of thumb is to ask if it’s an application that you would use personally. If yes, do your diligence and consider whether the current price is worth paying. If not, walk away.”

In February, Lucas and Emmet attended ETHDenver, a large crypto conference where they met scores of other crypto enthusiasts and venture capitalists — and also contracted Covid-19. The number of activities at the conference was “ridiculous,” Lucas says.“Across four days, there's like 1,000 events, which is more than Burning Man.” (He clarifies later that he has not personally been to Burning Man, and that there may have been fewer than 1,000 events; a CNBC article suggests it was closer to 500.)

In sum, they raised $1.3 million in their pre-seed round, which closed in late April. In an Instagram post announcing the total, they’re posed in dark t-shirts and jeans, arms flexed, smiling slightly, mirroring each other. In all the images of the two of them together we found online, they’re positioned in these clothes, in this way.

DAOs in Doubt

To contextualize DAOHQ in the broader crypto landscape, we spoke with James H. Waldo, who teaches computer science at Harvard’s School of Engineering and Applied Sciences and technology and policy at the Harvard Kennedy School. He also serves as the School of Engineering’s chief technology officer, and has been working in distributed systems and consensus algorithms — fundamental aspects of DAOs — for decades.

He’s not sold on DAOs as revolutionary, or even effective. Corporations already have shareholders who vote, he points out, so the voting system of DAOs isn’t all that new. “Distributed autonomous organizations no doubt are an attempt to recreate something we already know how to do, but in a way that doesn't seem to work very well,” he says.

He recounts a conversation with Schneier, whom we had spoken with earlier. “[Bruce] said to me, ‘You know, there must be some good distributed stuff in crypto because the cryptography is crap.’ And I realized that I thought there must be some good cryptography because the distributed systems [were] crap.”

Waldo cites the ConstitutionDAO, which formed in November 2021, as an example of how DAOs’ decentralized structure can pose problems. ConstitutionDAO raised tens of millions of dollars from tens of thousands of people in a bid to buy a rare copy of the U.S. Constitution at a Sotheby’s auction. ConstitutionDAO lost the bid. But due to a lack of accountability, Waldo says, the DAO had no way to return the money, and refund attempts were waylaid by steep fees.

It’s not the only example of such a failure. The original DAO, formed in 2016, was hacked only a few months after its inception, resulting in a $60 million loss.

And beyond their dubious functionality, DAOs themselves pose risks, Waldo says, since their decentralization and anonymity renders them great tools for nefarious actors.

“The main forms of use these days are for money laundering and ransomware payments,” he says.

Emmet pushes back on this assessment. “Crypto is good for money laundering. It's also good for a lot of other things. Cash is really good for money laundering. Small businesses in America are phenomenal for money laundering,” he says. “The same tech you would use for money laundering, you also use for privacy and protecting people who might be in places where they have oppressive governments.”

He gives the example of Ukraine DAO, which has raised millions of dollars for the Ukrainian war effort, including from Russians who may have otherwise been unable to donate. Yet at the same time, he adds that the traceability of crypto makes it “pretty bad for illicit activity.”

Waldo’s concerns are not unique: Nationally, bipartisan lawmakers are pushing to regulate cryptocurrencies and DAOs. The classification of digital assets is being adjudicated by the courts on a case by case basis, explains Howell E. Jackson, a professor at Harvard Law School. Jackson has consulted for the United States Treasury Department, the United Nations Development Program, the World Bank, and the International Monetary Fund.

Historically, bitcoin, which Jackson calls “the grandfather of cryptocurrencies,” has been classified as a commodity, but the Securities and Exchange Commission is currently arguing in court that Ripple, a digital currency exchange, is a security.

The security versus commodity distinction determines which regulatory bodies the digital assets are subject to, and therefore which rules they have to play by — making it difficult for entrepreneurs to know what’s fair game. Currently, legislation like the Bipartisan Responsible Financial Innovation Act, introduced this past June, tries to standardize these regulations.

In sum, it's “a little bit of a muddle right now,” Jackson says. “A contested space.”

Both Lucas and Emmet offer support for clarifying standards. “They're thinking about how to support grandmas and their pensions,” Lucas says, “and that's something we support as well.”

But Waldo and Schneier are less sure that DAOs are secure enough for, as Lucas puts it, grandmas’ pensions.

“Notions of smart contracts are attempts to replace things that we have actually worked for a long time to understand and put into a framework that works for everybody, like contracts, and replace them with software, which is generally unreliable, and unproven,” Waldo says.

Their successful pre-seed fundraising enabled Lucas and Emmet to start recruiting employees. Lucas says they received over 1,000 applications.

In some DAOHQ recruiting emails, Lucas offered to compensate people for applying. “We’ll pay you!” one reads, in bold. “I'll venmo you once our recruiting round is over.” Their rate: $5 for applying and signing up, $2 for every referral, and $10 for every successful referral.

By the end of the spring, they had hired six full time team members across the world. “It's kind of cool, because every call is multiple time zones, countries, nationalities,” Lucas says.

In March, Emmet and Lucas set up headquarters in Miami, a major crypto hub.

“We got an Airbnb that was actually like sharing a bed, because Miami is so expensive,” Lucas says. (Emmet corroborates the bed-sharing on a phone call.)

Then in the summer, they watched the crypto world burn around them.

In early May, the price of Bitcoin dropped, and Coinbase, a major cryptocurrency exchange, plunged in value. A staggering $300 billion were lost as cryptocurrency prices collapsed.

“Terra went from 50 billion to zero in a few days. It was very cool,” Lucas says, referring to the cryptocurrency token Terra (LUNA), the disintegration of which precipitated the broader collapse. “Actually I was up at 2 a.m., looking at this. Before my eyes, I saw it go from 69 cents to 30 cents.” (On a later phone call, he says he used cool in a “morbid” way to mean “not cool at all.”)

For crypto critics, the crash seemed to validate characterizations of the currency as speculative and unsustainable, prone to inflationary bubbles and collapses.

“All currency is a consensual hallucination. But cryptocurrency is a consensual hallucination without the backing of any major government,” Waldo says. “Currencies are not speculative devices. Crypto is a speculative device.”

{shortcode-4819131afe44141d2d6a9cb30f80d24f256d83d2}

Luckily, DAOHQ closed its pre-seed round before the crash, and Lucas and Emmet were not planning on fundraising over the summer. Now this fall, despite the volatility of the market, Lucas and Emmet are pushing on undeterred.

“If you're bullish and excited long term, there's no reason to really fret that,” Emmet says. “The worst parts about crypto were generally flushed out — the people that were just in it for the really high highs, or building scammy projects. There's not enough oxygen and hype to thrive. And so right now, it’s just tons of people building who are solving real problems.”

When we first spoke with Lucas in early September, DAOHQ was about to launch its next round of fundraising — for which they set a $3 million target. Attempting to reach their goal would test the viability of the company, and would require weeks of constant domestic and international travel — from Seoul to New York City, Toronto to Los Angeles.

Dropping in on the Dropout House

With Lucas and Emmet away, we planned a visit to their local launchpad, which Lucas has termed the “Dropout House”: a colony of young entrepreneurs, with varying fractions of Harvard and MIT degrees completed, all living in the same house in Somerville. Lucas and Emmet crash here when they’re in town for a per diem rate.

This house is only the first Dropout House — Lucas is already working on Dropout Club, a community of and fund for such houses. The Dropout Club brand, which features an emoji-riddled website, evokes other content houses like the TikTok Hype House. Interestingly, there’s a hierarchy to the club, with five levels that determine funding priority. (Level 4, for example, is “Dad: you graduated, or you undropped out.”)

When Lucas explains Dropout Club, we hear the term “exstititution” for the first time — a neologism that describes institutional exit.

“The idea is to create a third space for these people, where university isn't the right thing for them right now,” Lucas says.

In what he later clarifies as a reference to community and not literally leading people in worship, Lucas describes his role in the Dropout House hierarchy as “almost like a priest.”

We visit the house on a weekday evening in early October. The other residents — all young entrepreneurs — are involved in and supportive of Lucas and Emmet’s various ventures. We want to get a sense of what they have in common with the duo, and what they don’t.

It’s an aggressively normal-looking house: navy with white trim and a well-maintained porch, nestled on a quiet, tree-lined street. We had pictured some visible evidence of the contrarian, innovative culture so trumpeted by the Dropout Club website. Actually, it’s just really nice: According to Zillow, it last sold for more than $2.5 million.

Beyond Lucas and Emmet, the house’s current tenants are Kaledora Fontana ’22, Marco Antonio Ribeiro, Mohib Jafri ’22, Shriank Kanaparti ’22, Rishank Kanaparti, Ali Mohamed, and Youssif Mohamed. Kaledora and Marco are working on their start-up, Ostium, a blockchain-based commodities exchange; Mohib and Shriank run Seed Labs and HarvardDAO — Web3-oriented venture capital start-ups.

Marco greets us at the door, peering down from a few steps up on the staircase. We toe off our shoes in the bare living room and leave them in a pile by an upright piano. Marco leads us into the kitchen, pointing out a few quirks: Instead of a kitchen table they’ve brought inside an outdoor wooden picnic bench; there are naked air mattresses in an adjoining room, on which Lucas and Emmet sleep when they’re in town.

We sit at the picnic bench-turned dining table and talk quietly as we wait for Kaledora, who — as will prove to be a trend of the Dropout House residents — is running more than half an hour late. (She texts that she’s Blue-Biking all the way from downtown Boston.)

The rest of the house slowly descends on the table. Shriank and Mohib come in together, trailed by a third person who looks a little too young to be a college drop-out. It’s Shriank’s younger brother Rishank, who graduated high school last year and is working as an engineer for his brother’s start-up while taking a gap year. He’s 17.

“Age and engineering aren’t correlated,” Shriank says fondly. “Thirty-five year-olds don’t know shit.”

Rishank sits silent and receptive for our entire conversation, which meanders between the residents’ various ventures and circles relentlessly around the ideas of risk, ownership, and building.

Mohib, Marco, and Shriank all echo, in one way or another, the belief that going to Harvard pressured them into the fields of finance, consulting, and big tech.

“There's a few institutional practices that do drive McKinsey and Goldman down our damn throats, right? They're not going to sponsor a seed startup looking for a founding engineer,” Mohib says, reflecting on career fairs where large, established tech companies like Google always had the “biggest banner.”

But Mohib pinpoints social dynamics as even more powerful than institutional behavior. “Much greater than who showed up at a career fair is like, ‘Yo, my blockmate just got an offer from Goldman.’ It's August! The school year just started and they’re set. What the hell am I doing?”

Kaledora arrives; she’s the only woman other than us. She squeezes in at the end of the table, drops off a New Yorker tote bag, and jumps into the finance-tech pipeline conversation.

“It’s like stenciled into their brain within three months,” she says. “Marco started at Harvard — 17 years old, had never heard of banking or consulting. I met him freshman fall, and within two months, he was like, ‘I want to go to Goldman.’”

In 2020, more than half of Harvard graduates went into consulting, finance, or tech, according to The Crimson’s senior survey.

This obsession with high salary, high prestige jobs is characteristic of the Harvard “mindworm,” says Kaledora. She argues that we’re all such Type A overachievers that academics aren’t enough — Harvard students create new battlefields of hierarchy, which is where final clubs come in, but also where intelligence and status indicators like an offer from Goldman feature. It’s a way to replicate status now that going to Harvard is no longer enough.

{shortcode-857f796b406f184dfb35953ca794554fae56d474}

All of the Dropout House residents we talked to were once infected by this worm, at least a little bit. Kaledora worked at McKinsey, Marco at Bridgewater, and Mohib at Tesla, before they each left to found their own ventures.

Lucas and Emmet never worked for consulting firms, Wall Street, or big tech companies. But like the other Dropout House residents, they see their chosen career path diverging from the standard Harvard notion of success.

“A lot of the people within the drop out, long term leave-of-absence community definitely have a sense of pride,” Emmet says. “I’m not necessarily saying the institution is bad. I’m just saying my conviction is higher.”

It’s not even about the jobs, or the ideas; It’s about this conviction, Emmet seems to be saying. It takes high conviction to take risks, to have the confidence that you and your idea will survive. And they’re not just willing to take risks — they revel in the aesthetic of risk-taking.

Similarly, Kaledora describes how she and Marco secured funding from Soma Capital, a software-focused VC firm. “We've been throwing around the idea of starting something for a while, but we didn't have…we just had this desire to build something new that would be within crypto,” she says. “But we weren’t exactly sure.”

“We just stayed up for four days straight, basically, and just iterated through every idea we could think of, and then threw together this application with just an idea,” she says. “And then they gave us money.”

Neither Kaledora nor Marco explain what their idea was, what it is now, or what they’re trying to do; instead they emphasize the exhilarating process of idea generation, the sacrifices and “sleepless nights” they have spent as founders.

Lucas and Emmet’s idea was more fleshed out when they decided to start their venture. But they still took a leap away from Harvard — a leap somewhat enabled by the Harvard name. Or, as Shriank puts it, “The crazy thing is as a Harvard affiliate, it's not impossible to raise from venture capital, and venture capital you can think of as a loan for smart people to figure out what the hell they're going to do — to make a lot of money and do something cool.”

To be clear, they acknowledge the privilege, even within the Ivy League, of being able to take these risks: “We should also take the other side. There are people who have student loans,” Mohib says, “and people who do not have the same fortunate position to take a risk.”

And Emmet’s risk barometer is a bit different from the rest of the Dropout House.

“Generally speaking, I would categorize it as low-risk,” he says. “It appears high-risk in the context of, I don't know, compared to what most Harvard students do. But my life isn’t in danger. We’re still able to take a modest salary so we can eat and handle any basic needs that we would have as 20-somethings. It's not like we’re going to be homeless.”

But he still speaks as if life is a gamble, and he enjoys playing the odds.

“It's my life,” he says. “I'm betting on me here.”

Overall, they suggest a duality between the conformist, risk-free Harvard path — consulting to an MBA — and the contrarian and risky drop-out, start-up route. But in some ways, they’re looking back and criticizing a battle they’ve already won — especially for those who dabbled in finance or consulting first. Paradoxically, perhaps risk can more easily be taken by people who have first succeeded in conforming, and for whom taking the risk might not actually be all that risky; they always have a Harvard degree to fall back on, or for drop-outs, they always have the option to finish their degrees.

Tracey Rosen, a Social Studies lecturer who teaches “Global Capitalism and the Entrepreneurial Self,” frames this contradiction between institutional reliance and risk. She speculates that student entrepreneurs are a “negative image of the finance and consulting breed” in that they still work 80-hour weeks and are motivated in large part by money. Instead of completing their degrees and heading to Goldman Sachs, entrepreneurial students believe that the radicality and cleverness of their ideas, regardless of what those ideas are, can rise above the status quo. This replaces success by institutional metrics with a notion of inherent talent, Rosen suggests.

“There’s been a huge divorce between the concept of education — the idea that when people labor at a thing and learn from it, they get better — and the idea of being naturally gifted and smart,” says Rosen. “And [it results in] this kind of unceasing performance of smartness.”

So Rosen agrees with Kaledora’s “mindworm” criticism, but doesn’t think student founders have escaped it. Similarly, though Lucas describes the Dropout House as an escape from institutions, at times its value seems more dependent on proximity than distance.

“We can put houses there right next to Harvard, and then you get all the community from them,” he says. “So you can go to the classes, you can hang out with your friends. And you don't have to pay $60k a year.”

As we sit at their table in Somerville — a nine-minute Uber from Harvard’s campus — we can’t help but wonder how far they’ve really gone. When we leave the house, Marco is looking at a box of Barilla pasta, checking the cook time. It’s such a college kid thing to do, we think to ourselves: learning to take care of yourself, but being new to it, still following the instructions.

Cryptopia, or Smoke and Mirrors?

All of this branding and self-promotion around “exstitutions” is not just about dropping out of elite colleges — it’s part of a much bigger utopian vision facilitated by crypto and DAOs, in which DAOHQ could serve as the essential platform.

We get this vision when we meet Emmet in person for the first time, on the second floor patio of the Smith Center. He arrives a little late, wearing a black turtleneck, light wash jeans, and a brown leather belt. We ask if he’s deliberately evoking Steve Jobs. He’s not, he says, although he does cite Jobs’s book later as a major inspiration.

Emmet describes cryptocurrency as “hard money” as opposed to “fiat money,” or government-issued money not backed by a commodity like gold.

“The goal is to have this international reserve currency that's not controlled by any government. So that's exstitutional, in the sense of exiting the fiat system, going back to a digital version of the gold standard,” he explains. It’s a surprisingly historical-looking analogue for such a modern platform.

Reaching even further back, he describes the DAO as a kind of “experimental governance” akin to early American history — where Alexander Hamilton from the Dropout Club branding reappears.

“If you've watched ‘Hamilton’ the musical, they're just making this stuff up as they go,” Emmet says. “They're just debating, how should we govern ourselves?”

And his answer is: through the blockchain. “You can have this completely international, decentralized, censorship-resistant, very democratic way of organizing people and money,” he says. He invokes people living under authoritarian regimes, able to join a global, underground economy without fear of persecution under their country’s institutions.

Lucas, Emmet, and Kaledora all cite Balaji Srinivasen’s “The Network State,” published in July, as a foundational text to this democratic vision. Srinivasen, an entrepreneur, investor, and former Chief Technology Officer of Coinbase — a cryptocurrency platform that plunged this summer — advocates for a world of competitive governance through DAO-style states: highly aligned online communities that crowdfund territory and eventually gain diplomatic recognition. Publicly available, “The Network State” appears to be written with the document preparation software LaTeX, like a problem set, and lays out its future in pithy aphorisms like “Our idea is to proceed cloud first, land last.”

One of the key elements of network states, Srinivasen argues, is a recognized founder: “A state, like a company, needs a leader.”

DAOHQ could be the platform on which DAOs become network states. Emmet uses the terms “libertarian-left” and “progressive” to describe the ideological tenor of this vision: “Very much just live and let live in terms of social issues. Let people do what people want to do.”

Where do welfare and the other material functions of the nation state fit into the network state?

“Think of it like if Amazon Prime also provided housing and childcare, or something,” Emmet says.

We ran this vision of the network state by James H. Waldo, the HKS professor. “Yeah, good luck on that. I have science fiction on all sorts of things,” he says. China and most other governments are regulating, not recognizing, cryptocurrencies, he argues, so there’s little chance of DAOs receiving any kind of extraterritorial status.

Emmet does clarify that he doesn’t see Srinivasen’s vision materializing completely anytime soon. “I wouldn't bet on nation states going away,” he says. But he emphasizes that the idea of competitive governance remains “really exciting.”

“We're going to hopefully see more of that,” he says, and suggests one way forward might be a possible reorientation of American political parties, with one embracing crypto. “I'd be curious, even in the next election cycle, if any party tries to lay claim to the crypto Web-3 crowd,” he says.

Waldo remains skeptical of even a smaller political shift. “Talk to the crypto bros — and I would claim that most of them are bros,” Waldo says. “What value are they actually adding to society? I haven't heard a good answer. Very pie in the sky, handwave handwave, bubble bubble, smoke and mirrors.”

To Waldo’s “bros” claim, indeed, only 17.7 percent of venture-backed crypto and blockchain companies have a woman on their team of founders, according to a 2019 report released by Blockworks, a blockchain non-profit. On the investor side, Gemini Exchange’s 2021 State of U.S. Crypto Report revealed that women make up only 26 percent of investors in the space.

Rosen speaks of an anti-institutional, “value-creating, risk-taking hero adventurer” image of masculinity that has found new representation in young male tech entrepreneurs. The democratization of “smartness,” the idea that anyone can be an expert and it doesn’t matter how old you are or whether you went to college, is strongly tied to the male conception of “mastery” — that the world simply exists for them to conquer it, Rosen posits.

While Emmet doesn’t see entrepreneurship as inherently gendered, he acknowledges that “masculine traits like competitiveness, persistence, confidence, and risk taking are generally rewarded.” He also mentions a “Women in Web3” event DAOHQ participated in, aimed at “getting more women involved in the Web3 space as developers, community managers, founders, investors, just across the board.”

As for the makeup of DAOHQ’s own team, Lucas says: “I wish I worked on a startup where we can say, ‘Okay, we're gonna make sure 50 percent of hires are women,’ but that doesn't maximize our chances of success currently, based on the applications we're seeing.”

“Crypto is an extension of cyber-psychedelic, tech, and libertarian culture, all of which is dominated by men,” he later wrote in a text. “So it seems that the crypto logos, pathos, and kairos are generally more appealing to men. That being said, the crypto ethos itself aspires to be person-agnostic.”

Waldo synthesizes the criticisms of this abstract, libertarian ideal.

“I understand that a lot of people don't like where the power is centralized,” he says. “But most of the work on these DAOs or NFT organizations or other such things are not an attempt to democratize. They're an attempt to switch the set of people who have monopoly power from the ones that currently have it to the ones that are doing Web3 applications. And that's fine, if they want to try and do that. I understand greed.”

In sum: Lucas and Emmet see themselves and DAOHQ as an “exstitutional” step towards a digital, more free world. But this vision is weighed down by a miasma of gender, technological and economic realities.

***

All of this is to say — Emmet and Lucas chose to leave Harvard, and they stand by this decision with conviction. It is hard to chart an uncertain path. Most people don’t do it. It’s much easier to be skeptical of their worldview, and the terrain in which they stake their venture, than it is to respect them for their guts.

It’s also worth noting that almost everyone we talked to who was excited about crypto is under 30; almost everyone who was pessimistic about it is over 30. Like many youth-driven, anti-institutional movements, it’s possible the older generations are just cynical or unable to see fault in the institutions in which they are embedded.

Ironically, though, the youth might not have distanced themselves much from these institutions. The Dropout House is less than 10 minutes away from Harvard, with three Harvard alums as tenants and the Harvard door always ajar to those on leave. Many of them have finance and big tech jobs on their resumes.

And crypto — DAOHQ especially — was constantly trumpeted to us as something meant to remove barriers to entry, to improve the accessibility of economic institutions, and to reduce power concentration among the wealthy and the important. But it’s not clear that this highly technical, highly volatile, male-dominated, abstract, and elite institution-adjacent world is really open to all.

Every iteration of the internet has bred and lost a utopian vision. Led by a vanguard composed primarily of the elite, Web3 might not be any different. Web3’s material and ideological attempt to leave institutions — an attempt at “exstitution” — risks re-entrenching opacity and inequality as much as it promises transparency and egalitarianism.

We don’t know what success DAOHQ will see in the future. Lucas and Emmet are trying to raise another $3 million right now, but did not disclose their progress so far.

{shortcode-b2ceebbb1beb8bd8b7113e0cb9f62b96358f203a}

Outside on the second floor patio of the Smith Center, late on a Friday afternoon, we finish up a conversation with Emmet. The Owl Club blasts EDM in the background. Emmet tells us he’s heading to Toronto. He’ll be back in town soon for the Harvard-Yale football game.

He compares himself to some of his Harvard peers: people who ended up in consulting, entrepreneurs who stayed a little closer, a little longer.

“It just maybe takes them a while to get to the point where they want to escape the matrix,” he says. “I realized that much sooner.”

We ask if he thinks he’s escaped the matrix.

“I don't know if I fully evaded the matrix,” he says. “I feel like we can't fully, fully know.”

— Staff writer Talia M. Blatt can be reached at talia.blatt@thecrimson.com. Follow her on Twitter @talia_m_blatt

— Staff writer Isabel T. Mehta can be reached at isabel.mehta@thecrimson.com.