Web3's Summer of Love
Is Web3 a movement or just cool tech, rug pulls, fart NFTs, too many podcasts, Buzzfeed falls and the best sandwich reviews in New York.
Welcome to People vs Algorithms 13.
I look for patterns in media, business and culture. My POV is informed by 30 years of leadership in media and advertising businesses, most recently as global President of Hearst Magazines, one of the largest publishers in the world.
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Let's say someone gets robbed. And let's say it's of material value, like a couple of million dollars. Normally this would be an issue for law enforcement, get splashed all over the news, particularly if the crime was intriguing or dangerous, etc. Especially an art heist!
Now it's just a good meme on Twitter and another strange tale from strange days on planet Earth.
You may have heard the story. It goes something like this. A New York gallerist and art collector named Todd Kramer collects some Bored and Mutant Apes and a bunch of other NFTs, which by now are surprisingly valuable. He's hacked (phished, actually) and his 16 NFTs are stolen, a haul worth an estimated 593 ETH or about $2.2M when the crime went down but now less, sadly. About $1.9M as of today, but I doubt this will make Todd feel much better.
In an attempt to get his Apes back, Todd goes to Twitter and proclaims "all my apes gone.” Hopefully he can enlist the community to help apprehend the bad guys. I mean, who else you gonna call when there's a crime in the metaverse? After all, this is a serious art heist, probably top 10 of any given year.
But Todd acted hastily and didn't realize on Twitter you have to choose your words carefully.
Todd should have anticipated that "all my apes gone" rings through the brain in a way inescapably like Cass Elliot and the Mamas and Papas singing "all the leaves are brown" in California Dreaming. He may not have anticipated that his Tweet would elicit memories of a song heralding the arrival of the 60's counter cultural movement. Or evoke thoughts of an earlier California Dream — a Gold Rush fantasy of new beginnings, quick wealth and good fortune. Or even just that Californians need a little bit of a good dream right now. But, maybe I am reading too much into this.
Of course Twitter broke into a mocking chorus. Because, it was funny and kinda perfect and, if Todd isn't a boomer, the internet will pretend he is (full disclosure, not a boomer). Then, perhaps more significantly, when the dominant NFT marketplace, OpenSea, caved to Todd’s appeal to freeze trading of his Apes, many in the community responded with outrage at the violation of Web3's first principle — thou shalt not centralize authority —and proceeded to turn the meme to gaming reference, Donkey Kong Tropical Freeze.
The whole thing stuck with me, probably because I couldn't get the song out of my head and it's deep winter in New York now and I would rather be safe and warm in LA. It made me think the late 60’s, cultural turbulence and a movement that defined a generation. Which led me to wonder, does this Web3 stuff amount to a real social “movement” or is it just another chapter in the technical evolution of the internet. Was this a time that would eventually be seen as a generational inflection point. Was Jack Dorsey the new Alan Ginsberg? Was Vitalik Buterin a generation's Timothy Leary. Is Crypto Miami the new Summer of Love, San Francisco.
Now, I am sure the "silent generation" looked upon their hippie progeny with confusion and probably a mix of scorn and envy. If there was a path to enlightenment, it probably started with a haircut and a job and for god sakes stop taking your clothes off in public and smoking so much weed and doing acid. A July 7, 1967 cover story in Time Magazine helped provide perspective on the new hippie radical:
Difficult as it is to take precise bearings on the hippies, a few salient features stand out. They are predominantly white, middle class, educated youths, ranging in age from 17 to 25 (though some as old as 50 can be spotted). Overendowed with all the qualities that make their generation so engaging, perplexing and infuriating, they are dropouts from a way of life that to them seems wholly oriented toward work, status and power. They scorn money—they call it "bread"—and property, and have found, like countless other romantics from Rimbaud to George Orwell, that it is not easy to starve. Above all, as New York's Senator Robert Kennedy ("the best of a bad lot" to hippies) puts it: "They want to be recognized as individuals, but individuals play a smaller and smaller role in society. This is a formidable and forbidding arrangement."
Draw parallels as you see fit. Now we have the crypto red pill and adderall. These “insatiable hedonists” cut the knot with hallucinogens:
"The standard thing is to feel in the gut that middle-class values are all wrong," says a West Coast hippie. "Like the way America recognizes that Communism is all wrong." They feel "up tight" (tense and frightened) about many disparate things —from sex to the draft, college grades to thermonuclear war. Hallucinogenic drugs like marijuana and LSD, they believe, are the knives that cut those knots. Once unleashed, most hippies first become insatiable hedonists, smoking and eating whatever can turn them on in a hurry; making love, however and with whomever they can find (including "group grope") that "feels good and doesn't hurt anybody"; saturating the senses with color and music, light and motion until, like an overloaded circuit, the mind blows into the never-never land of selflessness. The middle class ego, to the hippie, is the jacket that makes society straight, and must be destroyed before freedom can be achieved. One East Coast hippie recently held a "funeral" for his former self. "You must follow the river inside you to its source," he said, "and then out again."
Surely the same intergeneration confusion exists with talk of $10M CrytoPunk JPEGs or how Web3 is going to stick it to Zuck or how an unemployed gamer kid from your high school is now a billionaire or why a new currency with a Ponzi architecture but deep aspirational philosophical center is the path to economic freedom. Just because stuff is weird or hard to explain to your parents and grandparents doesn't mean it's NOT a "movement.”
Ask anybody who knows what Web3 is and they will first tell you it is about decentralization, which on the surface means taking power from big, money-grubbing, data-hoarding "centralizers'' and giving back to the people but now the people are not hippies they are "creators” or “degens.”
But what makes a moment a “movement”? In my mind it’s when a bunch of people engage in common cause to challenge the status quo and bring about social change. Per Wikipedia: “A social movement is a loosely organized effort by a large group of people to achieve a particular goal, typically a social or political one. This may be to carry out, resist or undo a social change.” Obviously, what we are feeling in the world today is about much more than Web3 and blockchain. Just like the sixties weren't just about LSD. I will not be so naive to equate a technological re architecture of the internet and its underlying financial rails to a social movement.
But, aspirationally this whole thing longs to be much more than a new database — it wants to be about individual empowerment and ownership, freedom of speech and protection of privacy, the provenance of truth and facts, a renewed spirit of community. If these ideals are going to sum to a “movement”, lots more people have to benefit, not just crypto dudes and VCs. This idea has become the subject of much debate, including @Jack himself, proclaiming on Twitter "You don't own "web3." The VCs and their LPs do. It will never escape their incentives. It's ultimately a centralized entity with a different label. Know what you are getting into..."
Inevitably some will benefit much more than others. In the process of tokenizing the world, the architects, risk takers and hustlers will become wildly wealthy and it's unclear how this trickle down more broadly. This is one place the analogy breaks down. Hippies were poor, tech bros are rich, although many of the former went on to lead companies and express their inner rebels as CMO's of large corporations. The socialist pundit might view the whole thing much more harshly:
Crypto, like meme stocks, is a poor replacement for the American dream. A functional nation would end gerrymandering, pass campaign finance reform, end the filibuster, abolish the undemocratic U.S. Senate, tax great wealth, institute public healthcare and build a social safety net to ensure that no one in our very wealthy country slipped all the way through the financial cracks of life and was ruined. But that’s not the American way. The American way is to cheer on the few lucky ultra-rich people, and fete them as heroes, and look for a way to emulate them, although such a thing is mathematically impossible. Instead of socialism, we have given people crypto. They buy crypto, for the most part, not because of lofty beliefs in techno-futurism, but because they think it is a way to get rich quick for a low entry price. Crypto is just a modern lottery ticket. But whereas lottery tickets only cost you a little at a time, crypto will inflate to the moon and then crash into the gutter in a far more devastating way. The bitterest irony, perhaps, is that while the regular folks flock to crypto because they think it’s a utopian land of opportunity for the little guy to make a buck, it is, in fact, largely controlled by a small cartel of rich investors. Just like everything else.
Movements need simple, populist use cases and visceral enemies. The sixties had civil liberties, Vietnam and “the man”. Web3’s use cases are less concentrated, obvious and populist. Perhaps the most visible can be seen in countries like Turkey or Nigeria where crypto trading has surged against deteriorating local currencies. Few outside of the technocrat class see data concentration and the power of Facebook and Google as issues to die for.
This is a technology-driven movement, like I suspect all movements will be in the future. The notion of Web3 underpinned by extremely complex technical concepts which are, like it or not, inaccessible to many but consequential nonetheless. We are rewriting societal rules as code and debates around these things, while fascinating, are extremely dense. This is the reason regulatory frameworks have struggled to keep up with digital realities.
This week, the hottest article in the space was a thoughtful piece by technologist Moxie Marlinspike challenging the nature of decentralization in Web3 technical architecture. It drew so much attention precisely because it took aim at the underpinnings of a movement. If Web3 is going to represent something more than technology, it is precisely because that tech embodies a higher ideal in its DNA. You have to start with the tech.
Unlike previous waves, this debate is taking place in the reality-bending, meme-ifing, filter-bubble of a forum called the internet and we have barely had a chance to get our arms around how it has impacted the democratic process at the most basic level. I hope more people are signing up to do PHDs in communication theory because... we need your help. It's hard to think “movement” where headlines that make it on to the news range from fortunes made and lost to a new InkDAO where members get NFT protocol ERC721 tattoos, influencers selling NFT fart jars (yes) and weird promotional videos for a new crypto island paradise near Fuji. Well, that one may have worked in the 60's.
Naturally, every good movement needs cultural tailwind. The 60's had Dylan and Hendrix and Woodstock. This movement has NFTs, Twitter culture, streaming everything and the fractionalization of IP rights. But if there was a defining culture to the moment, it would surely be gaming which is every bit as perplexing intergenerationally as acid rock was to the blues.
Here's where I net out on this. If this whole thing doesn't massively implode, we will look back on Web3 as something much more than a technological innovation. The moment has all the makings of a “movement” — huge social and cultural energy, anti authoritarian aspirations, a democratizing imperative, a language, and a promise to distribute spoils more broadly. Where people will naturally poke holes is it feels like it's all about money. Because most things are. Which is both a reason for cynicism and a sign of radical potential. Let's see how it works out.
Have a good week and stay warm…/ Troy
Six other things:
1: Today Buzzfeed is trading just above $4.50, putting the market cap at close to $600M. With over $100M in cash on the balance sheet, the value of the company is less than 1X revenue. The market wants EBITDA and to needs more comfort with ad and affiliate growth before we see appreciation. Total back of napkin, but if Meredith (a business with more revenue diversification, brand value but admittedly holding weight of declining print), sold to IAC for about $2.7B with $2B of revenue and almost $400M of EBITDA, then it’s not unreasonable to see Buzzfeed as worth a quarter of that. It will be interesting to watch the first earnings release.
2: Rug pulls are crypto scams whereby a crypto developer abandons a project or tanks its liquidity and leaves investors holding the bag. Def to be avoided. RugDoc "is organization that audits code on community projects and provides free educational resources to make DeFi safe." This is an interesting example of community self-enforcement. They aren't gonna stop the scams in yield farming, but they will pinpoint bad stuff and make the community much more aware. Hats off to this group. There’s a ton of stuff on Youtube too.
3: Podcasts have a supply and discovery problem. Like most digital content, they are easy and inexpensive to create. While the audience is growing, the number of podcasts in growing faster. Podcasts are the best way to carry advertising outside of video. But discovery is getting harder, constrained by the two choke points, Apple and Spotify. Podcasting Hasn’t Produced a New Hit in Years, from Bloomberg:
Companies have to rely on existing hits to launch new shows. Podcast listeners are loyal. They develop attachments to individual stations, shows and hosts. Listening to “The Daily” or Bill Simmons or Alex Cooper is comfort food for a lot of people. They’d rather listen to their take on a subject, even if it isn’t good, than the savvy take of a newcomer. Faced with an onslaught of new podcasts, people are retreating to the familiar. Companies need to use these hits to promote new shows.
This will also require an investment in marketing, and an innovation in formats. There was a period in podcasting where studios figured they could just hire a celebrity to host a show and attract a large share of their audience. But the novelty of a celebrity-hosted podcast has faded now that so many of them have shows.
4: More crafty marketing from CashApp. Andre Igouodola and Klay Thomson announced a they would be taking some salary in bitcoin and donating $1M in bitcoin to fans, surely connected to a CashApp partnership that will facilitate the giveaway:
Why It Matters: The Golden State Warriors players join a list of athletes who have embraced the “pay me in Bitcoin” movement, first started by NFL athlete Russel Okung in May 2019.
In November 2021, NFL player Odell Beckham Jr opted to take his entire annual salary in Bitcoin while also be donating $1 million in Bitcoin to his fans through CashApp.
Thompson and Iguodala have partnered with CashApp, the money transmitting and bitcoin buying application owned by financial services company Block, led by Bitcoin bull Jack Dorsey and previously known as Square, to facilitate their salaries’ conversion. The app will also intermediate the donations, which are already live in the announcement tweets.
Stephanie Matto has made more than $200,000 selling jars she’s farted into. It started as a publicity stunt — Matto hoped to gain some new followers for her burgeoning influencer business — and bloomed into full-fledged entrepreneurship.
Then she had a fart attack. She thought the problem was more serious than that, given the intense chest pains she experienced. After a rush to the hospital and a barrage of tests, Matto found out the very thing that had made her rich was causing the pain; she’d been eating too many beans, eggs, and protein shakes to fart more.