Thoughts on web3 — Oct 2022
In continuing the comparison between web3 and the Internet, we are squarely in 2001. Pets.com IPO’d and crashed, 95% of e-commerce sites have shut down, and the average consumer is back to shopping mainly in stores.
However, just like in 2001, the green shoots are growing:
- Tons of talented developers are now working on web3 companies
I remember my experience joining Siebel Systems in 2002, the #1 CRM Software product
It was still #1 by a large margin, but a number of Oracle alumni had recently joined a startup called Salesforce
- Very few, but a few, initial applications have been validated
Behind those applications are powerful primitives
We are in another economic crypto winter when all the value is created. In past winters, Ethereum and DeFi have emerged. What will emerge from this one?
What is different about this winter is all the ‘R&D capital’ Venture Capitalists and Retail Investors have provided. If you ignore the volatility, the Market Cap of crypto has been growing on an exponential scale.
Posit #1: We have a long way to go
With every new innovation in web3, 10 more constraints become apparent. A great wallet is created for storing tokens, it exposes issues with single sign-on, notifications, and safety. A simple savings account is created, but poor treasury management causes its downfall. In the case of Helium, its success exposed bottlenecks in Supported Hotspots and Supply Chains.
In looking at most projects, many have critical dependencies that will kill the project unless fixed, and many times that project cannot be the one to fix it.
We have yet to have fully independent, anti-fragile applications in the market. This is part of the reason SBF is buying an ecosystem of companies, attempting and create a vertical stack. This is similar to what Apple did with vertical integration until the ecosystem was developed.
Posit #2: In the next three years, valuable web3 companies will be started
This is the hardest to prove, but we have seen this movie too many times. The initial threads of applications are there, it is time for builders to build.
Web3 has the capital, the interest, and the early success stories to fuel the next five years of hard work. Let’s see what happens.
In the end, web3 will either be a niche market (like Insurtech) or a large market (like Fintech). Regardless, it can’t be ignored.
The Primitives that have legs:
- Distributed Incentives — incenting the community to work on your behalf
A new tool for Growth Marketers
Best Application to date: Helium
Launch with a community of people already invested and advocating for your success, then continuously incented to help your project grow.
2. Increased Efficiency and Transparency
First applied in Financial Markets
The Transparency piece is still a work in progress
Best Application to date: Stablecoins — USDC