Where’s the opposite of the moon?
The crypto markets are waking up from a hell of a bender. The last few years have been intoxicating. People making money for no reason. Funds raising billions of dollars of capital to invest into half-baked ideas. It’s all starting to fall apart. At least for now.
It is hard to be someone who tries to take an even stance on the space. You feel isolated on both sides. When you speak to pro-crypto folks they tell you blockchain-based technology is going to change the world. When you speak to people that are skeptical you quickly get into a heated debate about the lack of use cases and the rampant scams.
Can both not be true? There are cool use cases in crypto. Creators can make money through tipping and NFTs. I’ve made ~$750 myself through writing NFTs on Mirror. Developers have more access to open source code than usually sits within large organizations. You can experiment with how to incentivize groups of people with tokens.
It’s also undefined how this all works out at scale. The tech is slow and costly for both your wallet and the planet. A lot of people experimenting in this space have bad intentions and want to screw people over. You do not need blockchains to solve every problem. There are alternate technologies you could use.
I touched on this in a piece from February…
Most of life is a paradox. I like routine and I like change. I want to live in SF and I want to travel. I’m confident and I am doubtful of my skills. I like to connect with people and I like to be alone. The fact that much of life lives in the grey area is also what makes web3 so interesting. If you look deep enough you can see the potential of these new technologies, or you might see the opposite. Just like any new technology (e.g. social media), both can be true. It’s up to the early builders and users to dictate which direction this goes.
Web3 can provide ownership to more users and still be quite centralized. NFTs can provide economic opportunity to more creators and still the top 9% of holders can hold 80% of them. DAOs can give equal ownership to their users whilst being managed and run by a small minority of contributors. Instead of trying to state why the other side is wrong let’s try to learn from one another. The wisdom of web2 can help web3, and the innovative thinking of web3 can help web2.
Where are we today? Large institutions holding tens of billions of dollars are becoming insolvent. BTC and ETH are down 60% from all-time highs. My mom is asking me if she should take out her money. Reputable founders are having a hard time raising. Angels and early-stage VCs are pausing their web3 investments. This has all happened over the course of a few months.
A few thoughts on what’s going on:
Founder Sentiment: Founders are still excited about building in the space. The number of conversations with people still interested in experimenting with web3 primitives (e.g. tokens, NFTs, identity solutions, etc) has not stopped. Although the issue lies in where those folks can go to raise capital for their ideas.
Investor Sentiment: Investors are taking a pause on web3 investments. I’m hearing this from founders and from the investors themselves. Especially angels. If you are an angel, you have potentially seen 20%+ of your assets disappear. Telling your family at the dinner table that you are still interested in investing in web3 companies in the current market probably would not go well. There will be an opportunity for higher risk/conviction investors in today’s market. If you are an investor reading this right now let me know. I have quite a few friends still looking to raise.
Bye-bye scammers: Lots of scammers will leave. For now at least. This will a.) reduce the bullshit and b.) potentially lower the heat the space gets from outsiders. Both will lead to more critical decision-making and logical conversations about the space.
Zooming out: If you are reading this you are probably in the tech industry. If you are like me, you have probably lost a large % of the money you have gained in the last two years. It’s important to zoom out and check where your savings were in early 2020. It’s probably slightly better now than it was then. I’m mentally writing off a lot of the gains from the past few years. It’s helpful to use this period as a lesson on how to manage your investments and money.
Low risk becomes sexy? People in SF give you a smug look when you say you are working at a big tech company. You almost feel like you are not living up to your potential unless you leave and join a startup. That accelerated with web3 entering into mainstream consciousness. If you really wanted to take a big risk then joining a web3 company was the place to be. For the past year, that has proven to be successful. You have probably made a lot of money and have a large social following because you are one of the few important web3 companies. I still think this will hold for a while, but I am curious to see how society's impression (specifically in tech) starts to change with regards to joining big tech companies or not. Having a steady paycheck is nice!
Some web2 companies will pause explorations, others will not: My purview at LinkedIn puts me in touch with traditional companies looking to experiment with web3 tech. I recently spoke to a company that wants to experiment with NFTs. Their core business could not be further from NFTs, but they are willing to invest a bit of their product and engineering resources to explore what their opportunity could be. I’m not in a position where I make budgeting or headcount decisions, but it feels kind of silly to pause investment despite prices in the crypto market going down. Now might be the best time for forward-looking execs to acquire a web3 company or hire talent. Those that continue to explore will be ready to take advantage of the next wave.
In these times of volatility, I have been reflecting on why I entered this space. It serves as an important reminder for myself and my friends about why we had the conviction, to begin with. Here are those reasons:
Being able to influence a new space: I have always been curious about new things. I think a lot of others are too. Independent of web3, I like to learn about new technology. When you’re earlier in your career, you can feel that at times you don’t have agency and control of the industries you work in. It’s hard to change spaces that have existed for generations before you. Web3 feels like we can shape a new area.
Career progression: You are taking a bet on the growth of the space. If it continues to expand as it has in the last decade, just simply being here will increase your chances of outsized career success. This has happened to me and my other friends over the past few years. You jump into something, be curious, learn, and share, and you slowly become a quasi-expert in the space. These compounds over time. It feels nice to be young and knowledgeable about a new space.
New ways of monetization: When there is a new way to make money for people online, I tune in. This comes from a background of content creation. It’s hard to make money online. NFTs and tokens/tipping are allowing people to have more tools to monetize. New tools for monetization will lead to more content creation.
How are you feeling at the moment? Still bullish? Questioning your decisions? Curious to hear how you feel.