The DAO - Are you investing?

My impression of the DAO is that people are pooling ETH in the control of a smart contract. The smart contract implements certain rules for governance on how that ETH is spent. The people who fund the DAO will receive tokens that represent their "share" of the contribution. These tokens confer voting rights and in theory give the holders access to benefits from the work they paid for.

There are several major issues I see with this:

If the DAO hires contractors who promise to return/share off-chain profits to the DAO then the DAO becomes a VC firm and a security. It also still depends upon "trust" in the contractor to actually return the profits.
Introducing crypto-graphic bureaucracy is bound to slow things down
Direct democracy (and even indirect democracy) has struggled with BitShares
Projects the DAO could fund on-chain would have to charge 'fees' and 'micropayments' if the revenue generated is to be returned to the DAO.

In general, collective investment cooperatives are economically inefficient (design by committee). Giving over control of your capital to a bureaucracy is likely to yield you much lower returns. Large pools of money are often spent inefficiently if there are not tight controls. If there are tight controls, then the bureaucratic process becomes so expensive and time consuming that few will want to jump through it. Codifying bureaucracy is not going to make it more successful than existing bureaucracy.

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