Drawbacks to a DAO

There are always pros and cons to different kinds of organizations. Let's explore some of the drawbacks with DAOs.

A DAO is meant to be contributor-run, meaning that it depends on the community to contribute meaningfully to help advance the cause. There is usually a less formal hierarchial structure in place and it may cause members to be off-course and not working optimally as they may not have direct guidance on what they should be doing.

Confusion on direction the contributors should take.
It is more difficult to work for a DAO if you are the type of person that wants to be told what to do and get it done. However, there are many organizations working on creating DAO tooling to make contributions easier to track and manage.

Being open source can be both good and bad: it leads to more transparency and trust in the organization, but it also puts a target on your head if a bad player finds a weakness in the DAO's code.

It can be very difficult to understand the structure of the DAO, how to contribute to a DAO, and how to get paid for your work.

Hacker analyzing the source code.

DAOs sometimes also have trouble getting their token holders to vote regularly. Additionally, it may be more profitable for a Founder to start a company traditionally vs a DAO where you may have to share profits and have others decide what happens with your treasury funds.

DAOs are constantly evolving. Good people are working hard to fix these issues and make DAOs easier to understand and use.