My Journey Down the Web3 Rabbit Hole

I took the Red Pill. This is the first of several posts laying out my journey down the Rabbit Hole. These are directed predominantly at operators who, like me, are interested in leaning into web3. They focus on fundamental concepts, with sources, that I found helpful for builders.1 It is such a massive and ever-expanding area that it can be hard to know where to start. I’m hopeful that these blog posts will help operators dig into the web3 areas most relevant for building in this space. I’m also hopeful I don’t embarrass myself. 

I have a few goals. The first is to learn. This process has been exciting, daunting, and wonderful. While I love to read and talk to people about a wide range of topics, I find that I learn more by writing and I learn most by doing. These Rabbit Hole posts will cover some of the web3 concepts that I’m most intrigued by as an operator. I believe in thinking in public, and writing about these concepts has helped me to understand them more deeply. Second, I’m hoping to help other operators ramp up (sing it proud… WAGMI!). Part of that motivation is because I love helping others achieve their dreams.2 Another is that I want to interact with and work with other operators who are drawn to the same problem spaces. 

In almost every web3 conversation I have, I feel the need to start with where I am in my journey. This isn’t to impress, it’s the opposite. It’s a disclaimer that I’m at an early point on the learning curve and a big, flashing invitation for feedback and challenges to help push my thinking. I want to learn and grow.

So here goes: 

While I started investing into crypto (mostly BTC and ETH) in 2017, and a few funds including Multicoin in 2018, I didn’t truly dig into web3 until late 2020. Since then, each week I find myself more and more drawn to articles, podcasts, Crypto Twitter, Discord servers, and YouTube videos about different parts of web3. The signal-to-noise ratio on several of these is pretty tough. And the FOMO is brutal. 

Over time, I’ve expanded my participation from an investment angle to meaningfully include diversification across 15+ cryptocurrencies, several more crypto funds, some DeFi protocols, and a few NFTs. While I’ve spent countless hours reading about web3, I am confident I know 0.1% of what I wish I understood about the space (and that percentage likely declines each day as the amount of information far outpaces my ability to digest). That could be because this space combines so many different disciplines: cryptography and math; computer science; regulation; new business models; community; product; and many others. It could also be because the space is moving so quickly. I think it’s partly because I haven’t done enough building myself (yet) and I learn better when I’m building. Regardless, it is exhilarating. 

I love frameworks. I have always been drawn to the late Clayton Christensen’s theory of disruptive innovation. Rose Park — Clayton and his son, Matt’s, hedge fund — was the first investor in my last startup where I was CEO for nine years. Many parts of web3, in my opinion, are consistent with the theory of disruptive innovation in that *today* they are worse than existing alternatives on almost all dimensions except one. Albert Wenger (managing partner at Union Square Ventures, another major investor in my last company) said something similar here. Building on a decentralized architecture, as an example, has a lot of disadvantages, including scalability and usability. But trustlessness is also a core element of decentralized architecture — and for some users that should matter. Let’s be clear though, the latter is a relatively new dimension of quality (matching the disruptive innovation framework).

One possible implication of thinking about web3 as a disruptive innovation is that incumbents will be too late to react effectively and will underestimate the new dimension of quality that these technologies bring. At least that’s been the historical implication and one that’s been backed up recently by incumbent comments from the likes of J.P. Morgan chairman and CEO, Jamie Dimon. But that clearly doesn’t fit universally as many of the largest companies (from Facebook Meta to Square Block to, yes, even J.P. Morgan) are putting effort behind web3 (even if execution is questionable). Incumbents may be able to execute masterfully in a use case where web3 is sustaining to their business models and yet still miss the truly disruptive opportunities presented by web3. Nevertheless, I’m drawn to the disruptive innovation framework for web3 and so you’ll see me refer to it in my web3 posts both directly and indirectly. I am naturally attracted to products and companies that fit this framework. There are several other aspects of web3 that excite me, including those listed below. These topics are written as distinct but they are very much interwoven. I try to link to pieces that influenced my thinking with the hope they are helpful for other operators going down the same path (and because I’m not trying to plagiarize). 

As Messari pointed out, this space has the talent, capital, and (at least some) of the infrastructure to thrive. Let’s pause on this. You may be asking yourself: “Why should I care? I’m doing well in web2 and this web3 stuff seems like hype without substance. And honestly, the people that post GM on Twitter seem lame.” I think that’s fair. I think we’re in peak hype relative to real value creation for users of this technology (beyond investing/trading). I personally became convinced after digging into the technologies and beginning to understand some of the fundamental paradigm shifts that web3 creates. Not everyone will care to do that. If you’re looking for one signal that there is something real here, consider the incredible volume of top technical talent that is moving into the space. It’s a leading indicator of where the technology industry is going and I have never seen a movement like this throughout my career.

But while I believe web3 is the future, you will see in my writing that I still have meaningful questions about the present. For many non-DeFi applications of web3 I hear weak arguments for why something should exist on a blockchain and worse (or non-existent) arguments from builders about why something should be decentralized. Clearly there are examples where blockchain technology has unlocked meaningful value (e.g. Axie Infinity and play-to-earn), but we’re at a point in the cycle where some (not all) builders are failing to reduce to first principles the reason why something should be on a blockchain or why it should be decentralized.

 I find the language around maximalists and minimalists reminiscent of the binary counterproductive political culture that we live in. I appreciated Moxie’s post and loved Packy’s response to Professor Galloway. I learn better when I hear multiple sides of an argument, and although I believe deeply in web3, I wish we had more people like Moxie sharing thoughtful concerns and questions. 

I am excited to continue to learn by reading, writing, talking, listening and building. I believe in the process of thinking in public; the personal learning, the conversations that it starts, the serendipity that results. I’m sure I’ll write a lot of things that I regret later, but I would rather try and fail than not try at all. And yes, I’m plagiarizing that line. 

More Web3 Posts:

Let’s Just Decentralize it All…Right?

Community, Tokens and DAOs, Oh My!

Smart Contracts, Composability, and a Dash of DeFi

What Does Leadership Mean in Web3…Oh and What Worries Me About the Space?

My Web3 Content List

Thank you to the many people for reading drafts of these posts and helping me in my journey down the rabbit hole, including Amy Sun, Mikey Piro, Jasmine Xu, Jeremy Fine, Sawyer Middeleer, Blake Menezes, Will Quist, Maddy Allen, Matt Christensen, Hardik Mittal, Matt Pauker, Sam Blumenthal, Erik Vandekieft, Alex Kim, Hootan Rashidifard and several others. Everything that is wrong or stupid was inserted after they reviewed and gave comments.

Footnotes:

  1. Much of the content on web3 today focuses on trading or investing in the space. To be clear, I’m heavily invested in crypto, but these blogs are focused on operating in web3, not on investing. I think there is a good chance the market goes down before it goes up again. Or maybe it goes up and then down again. I am not opining on market movements. Given I intend to HODL (here we go!) for many years, I’m focused here on what it takes to operate and build in web3.
  2.  Our mission at my last company: To help entrepreneurs to thrive by giving them the capital and resources they need