Our Web3 Future
BY?KEITH TEARE?? ISSUE #296 ??VIEW ONLINE
Web3 is becoming a more familiar label for innovative technologies. But what is it? This week Maggie Hsu from Andreessen Horowitz gets the lead position for her article covering what makes Web3 marketing different.
Contents
Editorial
Tech stocks have somewhat rebounded this week so it has been possible to forget how much value has disappeared from the public markets. And while there are some interesting developments in the venture capital space (Tiger Global’s new $11bn sidecar fund, a great profile of Roelof Botha and Blackrock predicting 1000 energy sector unicorns) other things caught my attention.
Jessica Lessin’s wonderful writing covering the Facebook, Google, Apple universe was one. MG Siegler’s piece is a nice complement. Foundry Group terminating its two SPACs is another. The SPAC world has really ceased to be a viable path to a public offering for most companies. Forbes, with $200m from Binance newly banked, seems an unlikely candidate for example.
But top of the list for an attention-grabbing read was Andreessen Horowitz partner Maggie Hsu’s piece on Future covering the differences in go-to-market strategies between Web3 companies and their Web2 predecessors. It is a long thoughtful piece by an experienced product marketer. It really helps somebody contemplating a Web3 product understand the key elements of success and chart a path to navigating their journey. She ends with the following summary:
The key difference to remember is that the goals, growth, and success metrics of web2 and web3 are often not the same. Builders should start with a clear purpose, grow a community around that purpose, and match their growth strategies and community incentives — and with them, the go-to-market motions — accordingly.?
The building blocks to arriving at that summary are a must-read. Hsu starts out stating:
This new model, known as?web3, changes the entire idea of GTM for these new kinds of companies. While some traditional customer acquisition frameworks are still relevant, the introduction of tokens and novel organizational structures such as?decentralized autonomous organizations (DAOs)?requires a variety of go-to-market approaches.
It goes on to look at the difference in go-to-market strategies available to different types of organizations as depicted in this matrix:
Hsu drills down into the differing organization types, with and without tokens, and suggests ways of thinking about successful market entry.
Honestly, I have nothing to add to her work other than to suggest you read it. Even if you are not a Web3 participant it will clarify much about what characterizes Web3 and why it is part of our future.
Video
Our Web3?Future
Maggie Hsu?is a partner at Andreessen Horowitz leading go-to-market for the crypto portfolio. She previously led the go-to-market for Amazon Managed Blockchain at Amazon Web Services.
Every company faces some version of the “cold start problem”: How do you get started from nothing? How do you acquire customers? How do you create network effects — where your product or service becomes more valuable to its users as more people use it — that create incentives for even more customers to sign up?
In short, how do you “go to market” and convince potential customers to spend their money, time, and attention on your product or service?
The response by most organizations in web2 — the Internet era defined by large centralized products/services like Amazon, eBay, Facebook, and Twitter, in which the vast majority of value accrues to the platform itself rather than to the users — is to invest significantly in sales and marketing teams as part of a traditional?go-to-market?(GTM) strategy that focuses on generating leads and acquiring and retaining customers. But in recent years, a whole new model of organization-building has emerged. Rather than being controlled by corporations — with centralized leadership making all decisions about the product or service, even when using consumers’ data and free, user-generated content — this new model leverages decentralized technologies and brings users into the role of owners through the?digital primitive?known as tokens.
This new model, known as?web3, changes the entire idea of GTM for these new kinds of companies. While some traditional customer acquisition frameworks are still relevant, the introduction of tokens and novel organizational structures such as?decentralized autonomous organizations (DAOs)?requires a variety of go-to-market approaches. Since web3 is still new to so many, yet there’s tremendous building in the space, in this article I share some new frameworks for thinking about GTM in this context, as well as where different types of organizations may exist in the ecosystem. I’ll also offer some tips and tactics for builders looking to create their own web3 GTM strategies as the space continues to evolve.
Some see Web 3.0 as the next generation of the internet, a decentralized version of the web based on the blockchain. Here are the key principles behind it, and why skeptics are unconvinced it could scale globally.
Illustration: Amber Bragdon
Need for infrastructure will remain after crypto craze fades, investors believe
The telecommunications bubble at the end of the 1990s never earned a place in the popular imagination to match the dotcom bubble that occurred at the same time.
Deregulation and early internet euphoria combined to produce a massive over-building of new networks. An estimated $2tn of telecoms stock market value went up in smoke when the mania passed. But the new fibre optic cables that had been laid lived on, meaning that the infrastructure was already in place when companies such as Google and Facebook emerged to drive a much bigger wave of digital activity.
In the world of cryptocurrencies, could something similar be taking shape with a different kind of infrastructure? When the crypto craze passes, many of the currencies that have sprung up in the shadow of bitcoin will be worthless. But their soaring transaction volumes have created demand for real infrastructure and big investments are being made. If blockchains represent a new architecture that will shape the future of online activity beyond crypto speculation, then the need for infrastructure will remain.
Picking the ultimate winners in this game requires making assumptions about how this world will evolve. Will it lead to complementary, but linked, blockchains, with room for many players? Or will this be a winner-takes-all industry where a handful of networks each becomes dominant in a particular type of transaction? And will the software and services needed to make the technology usable by non-experts give rise to dominant companies in different parts of a new technology “stack”?
Former Twitter CEO Jack Dorsey recently discussed the possibility of a Bitcoin powered?Universal Basic Income?(UBI) strategy to end poverty. In a recent Twitter space chat, Dorsey was speaking to US congressional candidate Aarika Rhodes on how Bitcoin based UBI has the potential to solve income inequality.
It should be noted that Dorsey’s Start Small initiative has invested over $55 million across the United States and overseas to experiment on universal basic income. Start Small Initiative is a charity created by Dorsey for global?COVID-19?relief. According to the charity’s page, “After the pandemic, the focus will shift to girl’s health and education, and UBI.”
For Dorsey, the usage of fiat money creates many issues, he believes that Bitcoin’s fundamental structure may help fix them. “Obscurity of information forces and incentivizes people to negative (financial) behaviors that don’t work for them, their community or family,” said Dorsey while pointing out that current centralized systems are not in favor of poor communities because of the lack of transparency.
Private funds in the digital asset space face a set of unique challenges. Many of these challenges stem from the fact that crypto is still a new asset class with little to no industry wide regulation or standardization. There’s also no standard system established to handle the necessary accounting.
Several trends have been emerging in response to these challenges. Those within private funds have no choice but to come up with innovative solutions to adapt their business structures to the rapidly growing and increasingly in-demand world of crypto.
In particular, there are three important trends developing in private funds that work within the digital asset space:
· The unique structures of both venture capital and hedge funds
· Using “in-kind” transactions
· Demand for DeFi services and NFTs
These bullet points might seem vague or confusing to those unfamiliar with the topic, so let’s dive into the details.
WHAT IS A real ape? On OpenSea, the internet’s most popular NFT marketplace, answering that question incorrectly can be costly. Last year,?Bored Apes — cartoon primates linked to unique cryptocurrency tokens — skyrocketed in popularity. Now the cheapest cost $309,000, and OpenSea is crawling with imitations and rip-offs. Two projects?featuring flipped versions of original Bored Apes,?called Phunky Apes Yacht Club (PAYC) and PHAYC, vied for the title of?authentic?knockoff of the coveted simians; other apes, of which there are many, were just straight-up copypastas.
In December OpenSea banned PAYC and PHAYC, a step that elicited?grumbles?from the crypto crowd whose splurge has fueled the recent NFT craze. The move went against OpenSea’s self-styled image as a champion of?Web3, a decentralized version of the internet free from censorship or gatekeeping. A few days later,?a blog post?by former Signal CEO Moxie Marlinspike, whose?experimental NFTs?were removed by OpenSea, gave the impression that OpenSea risked becoming another traditional tech platform, the?“How do you do, fellow kids?”?to the edgy Web3 insurgency.
An African startup, Nestcoin, said it raised $6.45 million in a pre-seed funding round in which tennis’ star, Serena Williams’ Serena Ventures took part. The startup, which was launched in November 2021, plans to use the capital raised to educate, build and invest in web 3.0 applications.
Facilitating Crypto Adoption
Nestcoin, a Nigerian startup that plans to operate and invest in Web3 applications, recently announced it had raised $6.45 million in pre-seed. Leading the funding round were venture capital firms, Distributed Global and Alter Global.
Also participating in the funding round were U.S sports personality Serena Williams’ Serena Ventures, Alameda Research, A&T Capital, MSA Capital and 4DX Ventures.
According to a?report?by Forbes, the startup, which was co-founded by Yele Bademosi and Taiwo Orilogbon, plans to use the funds raised to facilitate the adoption of cryptocurrencies. Nestcoin also plans to use the capital raised to fund the building of a platform that allows content creators to earn while educating the startups’ subscribers. Bitcoin News
SPACs in?freefall
Two blank-check vehicles backed by venture capital firm Foundry Group have withdrawn plans for a U.S. initial public offering, according to regulatory filings on Tuesday, joining a slew of companies that have canceled listings this year.
The withdrawal by Crucible Acquisition Corp II and Crucible Acquisition Corp III comes at a time when volatility in the U.S. markets triggered by rate hike concerns, geopolitical tensions and a selloff in technology stocks dampen investor appetite.
The tech-heavy Nasdaq index has fallen nearly 10% this year, while the broader S&P 500 index has dropped around 6%.
The special purpose acquisition companies (SPACs) did not disclose the reason for canceling their listings.
Facebook — Out in the?Cold
Feb. 5, 2022 5:00 AM PST
Before I was an entrepreneur, my career as a tech journalist was marked by covering one story: the rise of the Facebook and Google advertising duopoly and everything it shaped.
I started following Facebook as a cub college reporter when it had a few hundred users. Google was my first big corporate beat at The Wall Street Journal, and I spent years chasing its every move. My first major experience covering mergers and acquisitions was Microsoft’s attempt to buy Yahoo, a deal motivated by Microsoft’s need to compete with Google and Facebook. I loved everything about the story — both the part about how these new gatekeepers were changing business as we knew it, and the rivalry between them.
Then the duopoly deeply disrupted the journalism industry itself. Many publications tried to take Facebook and Google head-on and compete for online ad dollars. I saw an opportunity to focus on what the duopoly could never do — quality journalism — and became an entrepreneur. Yeah, I guess you could say I’m a little obsessed.
And so, I am feeling a tad nostalgic this week, because this week’s earnings reports clearly signal the end of an era in tech. No, online advertising is not going away, nor has it hit a ceiling. And no, Facebook, whose disappointing financial guidance for the current quarter triggered?the largest market capitalization wipeout in history, isn’t doomed. Facebook and Google (or Meta Platforms and Alphabet, as they are now known) are still printing money from online ads and will for a long time. They are both cash machines.
But it’s naive to think of them as competing in the same business, the way we have for the past decade; their fortunes are far less entwined than they once were. In the last quarter, Alphabet’s revenue growth topped analysts’ expectations, growing 32% to Meta’s 20% with more than twice as much revenue. Meta signaled that growth in the current quarter could be very weak…..
I’ve been around long enough where I’ve heard about?“the end of Facebook”?at least?a few dozen times?over?the past?fifteen-plus?years — basically?since?the beginning of the company. Certainly since the introduction of the News Feed — the original sin and supposed end of the company, which actually was the start of a whole new era, both for Facebook and for the internet itself.
Anyway, Facebook is dying again. Except this time it actually is.
I don’t think it has anything to do with the stock price.1 This has happened before,?not even that long ago, and guess what? The stock not only bounced back, but took off to new heights. The current wipe out is even more massive in scale, but it’s a logical combination of factors — a perfect storm — that hit all at once. Some of those things will be corrected, some will not. But all of them are also?the reason?that the?company?is no longer Facebook.2?It’s now Meta. Facebook is just a product.
The jury is still very much out if the pivot-to-metaverse will work, and there’s clearly some Wall Street trepidation this quarter about the spend required to get there. But unlike so many companies that talk a big game about going deep down the path on a new initiative only to pull back when Wall Street gets jitters, Mark Zuckerberg is clearly all-in on this move. And has both the founder clout and control to weather a storm which would otherwise not give him the time to operate.
Anyway, we’ll see. As Zuckerberg himself has noted, it’s going to take?years?for the metaverse vision to be fully seen. Personally, I both?wouldn’t fully bet on it?but also wouldn’t bet against Zuckerberg.
This Week in?Venture
Seventy-five percent of the total value of US companies that have floated since 1995 has been created by venture-backed firms, including Alphabet, Facebook, and countless others. But how did an obscure investment strategy become the engine of modern innovation and where might it go next?
领英推荐
Sebastian Mallaby, author of an excellent new book,?The Power Law: Venture Capital and the Making of the New Future, joins?Azeem Azhar?to discuss the history (and future) of venture capital.
They also discuss:
I’ve known the Clay team since the beginning, and I’m hyped to share more of their story with you soon. Clay brings data sources together to help people find information and build (sometimes mind-blowing) automations. It’s pretty cool to see how companies are using Clay to superpower their growth, sales and recruiting teams. Here are a few neat examples:
If you’d like to join me and companies like Mainstreet, Pave and Newfront — click this Generalist link to get a month on the Pro plan for free. And check them out on Product Hunt this Tuesday!
Actionable insights
If you only have a couple of minutes to spare, here’s what investors, operators, and founders should know about solo capitalists.
Hedge funds and other nontraditional investors are pumping more money than ever into venture capital deals — driving valuations to new heights, according to PitchBook.
Early-stage valuations, which includes series A and series B, have gotten so high that they are beginning to resemble the late-stage valuations of previous years. In 2021, the median early-stage pre-money valuation reached $45 million, a 50 percent increase from 2020, PitchBook said in its annual U.S. VC valuations report.
According to the report, 231 early-stage deals were raised at valuations of $200 million or above compared to 65 deals in 2020. In 2016, only 24 deals reached those heights.
“All over the venture market, there’s a ton of money,” Kyle Stanford, a senior venture analyst at PitchBook, told?Institutional Investor. “With the amount of capital that is chasing yields, founders that have a strong story or some strong traction are able to generate much higher valuations than they were in the past.”
By?Hema Parmar
February 3, 2022, 5:02 PM PST
Tiger Global Management?has raised more than $11 billion for its latest venture capital fund, and is targeting another billion dollars before its March close.
The Private Investment Partners 15 fund — known as PIP 15 — is on track to close with $12 billion, according to a person familiar with the matter, exceeding the initial fundraising target of $10 billion.
PIP 15, which invests in internet technology startups in the U.S., China and India, is Tiger’s largest one yet, and follows several fundraises in recent years, each bigger than the one preceding it.
The firm’s $65 billion venture capital unit, led by Scott Shleifer, had raised $8.8 billion as of November with about $1.5 billion of that coming from employees, Bloomberg previously reported. By then it had already called about a third of the cash and started putting it to work.
We are coming up to two years since COVID truly hit the US. The first three months after Mar 2020 markets were down, as was startup activity. But after Q2 2020 we have seen a boom in fundraising like none before in our careers.
Tau Ventures is a Silicon Valley VC fund focused on early stage and as such, this post will describe our experience, focusing on what we have noticed and the pros / cons of it.
1) Brave New Seed — The data below is looking at 2,000+ deals / year within Tau’s focus (applied AI in digital health + enterprise + automation):
2) The Good — …
Family offices with venture portfolios have an average of 27 investments, according to a new report. And these investments — 17 of them, on average, direct and 10 of them funds — are helping family offices reap the rewards of a worldwide rise in venture capital investing.
A January report by Campden Wealth in London and SVB Capital in Palo Alto, Calif., found the average internal rate of return, or IRR, for venture capital portfolios at family offices was 24% in the 12 months before they were surveyed, up from only 14% a year before.
Also, venture-equity investments met or exceeded expectations of 75%-90% of the 139 representatives of wealthy families surveyed from around the globe.
“In the last decade, family offices have become more prominent and sophisticated venture-capital investors,” says Rebecca Gooch, senior director of research at Campden Wealth. The report is part of a series the firms are doing on family investing in venture capital.
Back in 2013, when venture investor Aileen Lee, founder of Cowboy Ventures,?coined the term “unicorn”?to describe VC-funded companies valued at $1 billion or more, just 14 still-private companies less than a decade old qualified for the title. Crunchbase?now counts?952 globally, with just over 300 in the United States alone, with the U.S. cohort valued at nearly a trillion dollars.
As you might suspect, the software, cloud, and media space is well represented, with recent entrants?Airbnb Inc. (NASDAQ:ABNB),?Snowflake Inc.?(NYSE:SNOW),?DoorDash Inc.?(NYSE:DASH),?Zoom Inc. (NASDAQ:ZM),?CrowdStrike Inc.?(NASDAQ: CRWD)?and?Moderna Inc.?(NASDAQ:MRNA) debuting to massive valuations
But that is about to change.
Larry Fink, the CEO and Chairman of giant money manager?Blackrock Inc.?(NYSE:BLK), sees addressing climate change as presenting a massive potential for new businesses.
“It is my belief that the next 1,000 unicorns–companies that have a market valuation over a billion dollars–won’t be a search engine, won’t be a media company, they’ll be businesses developing green hydrogen, green agriculture, green steel and green cement,” Fink said on Monday?at the Middle East Green Initiative Summit in Riyadh, Saudi Arabia.
Fink?has been publicly advocating?the importance of considering sustainability when making finance decisions in his highly anticipated annual letters to CEOs.
10?. One billion dollars.
Roelof Botha used to write 10? on the corner of his notepad every week when he started at Sequoia 19 years ago. It was a shorthand to keep himself focused on picking exceptional startups to deliver his private goal of $1 billion in total gains. It was also a milestone that he felt would mean he would have had a measurable impact on the venture firm.
He hit the 10? goal thanks to investments in companies like YouTube, Instagram and Square. In 2020, he even reached 101?, or $10 billion in total gains, putting him in the top tier of tech investors.
One thing haunts him: How much more could Sequoia have realized if he’d let those bets ride? Square, now Block, has grown tenfold in value since its IPO, even taking into account the market’s recent retreat.
“I’ve never sold a share of Square since we invested over a decade ago, and it served me well,” Botha said of his personal holdings. “So why wouldn’t we be delivering the same thing for our LPs?”
Today, Botha’s impact is more than the dollars he’s returned. An IPO or acquisition used to be the natural end of a VC’s dalliance with a company. Botha wants to upend that — for Sequoia, if not the whole industry.
Sequoia’s move, seeded by an idea from Botha, was to create the Sequoia Capital Fund, an evergreen venture model that will allow it to hold onto the stakes of its winners past the traditional 10-year VC fund clock. Eliminating that artificial limit suits Botha, whose favorite part of his job is working with founders from early company days well into the public markets. He still serves on the boards of public companies like 23andMe, Unity and Natera. In fact, he questions what it means to be a “VC” these days.
As leader of Sequoia’s U.S. and Europe business, Botha is in charge of keeping the firm at the top of its game. “He doesn’t want Sequoia to be the 10th best firm, or even the third,” said Sequoia partner Jess Lee.
“I think of myself as being part of the Sequoia team, where I get to work with founders to help them build phenomenal businesses. And I don’t really want to call myself a VC. It’s because we’re not fungible in that manner. I’m a non-fungible token,” he said with a laugh.
In early 2020, as the pandemic pushed it to the verge of bankruptcy, China’s highest-profile rival to Tesla Inc. was shunned by the venture capital funds and foreign investors that had powered its rise. So Nasdaq-listed?Nio Inc.?turned to China’s newest class of venture capitalists: Communist officials.
The municipal government of?Hefei, a city in eastern China, pledged 5 billion yuan ($787 million) to acquire a 17% stake in Nio’s core business. The company moved key executives from Shanghai to the city, which is less than half the size and 300 miles inland, and began producing more vehicles there. The central government and Anhui, Hefei’s province, joined the city, making smaller investments.
It might look like the kind of power grab some observers see as characteristic of President Xi Jinping’s China: an assertive state enforcing an ever-growing list of dictates on innovative private companies that are destined to discourage entrepreneurship. But the story didn’t play out that way. Nio turned its first profit in early 2021 and sold more than 90,000 vehicles by the end of the year. Rather than leveraging its stake to assert control, the Hefei government took advantage of Nio’s?booming share price?to cash out most of its stake within a year of its purchase — making a return of up to 5.5 times its investment — much like a private investor in London or New York might have done.
Fintech Boom
Africa’s tech start-ups are thriving. In 2021, more African tech start-ups raised more money from more investors than ever before, with fintech companies — including several based in Nigeria — heavily represented among the big winners.
According to the seventh edition of Disrupt Africa’s African Tech Startups Funding Report, 564 African tech start-ups raised just over US$2 billion in funding in 2021, which is a 206% increase from 2020. Disrupt Africa’s report shows that the average deal size more than doubled, increasing from over $1,7 million in 2020 to $3,8 million in 2021.
For Zachariah George, a managing partner at Launch Africa Ventures, a pan-African fund looking to address investment gaps in the investment landscape, there are several reasons behind this boom in investment. “For starters, I believe that there is a better understanding of the African opportunity, the cost of data has dropped dramatically in many African economies — which was a barrier for customers — and Internet and mobile phone penetration has improved, which means that a more people are now online,” George said.
Total UK fintech investment hit $37.3 billion in 2021, up sevenfold from $5.2 billion in 2020, according to figures compiled by KPMG.
In total, 601 M&A, private equity and venture capital fintech deals were finalised in the UK in 2021, up 27% from 470 in 2020. Five out of the ten largest fintech deals in the Emea region were completed in the UK.
Karim Haji, UK and EMA head of financial services at KPMG, saya: “The UK remains at the centre of European fintech investment with British fintechs attracting more funding than their counterparts in the rest of Emea combined.”
The global picture was also rosy, with total fintech funding reaching $210 billion across a record 5,684 deals in 2021. Payments continued to attract the most funding among fintech subsectors, accounting for $51.7 billion in investment globally in 2021 — up from $29.1 billion in 2020. A continued surge in interest in areas like ‘buy now, pay later’, embedded banking, and open banking aligned solutions has helped keep the payments space a magent for VC funding.
Startup of the?Week
Nvidia’s $40bn (￡29.6bn) takeover of the?Cambridge-based Arm?has collapsed due to insurmountable regulatory hurdles, leaving the British chip designer to seek a stock market flotation in the next year as an alternative.
The deal, which would have been the largest in the semiconductor industry, had become mired in red tape on both sides of the Atlantic and in China and had also faced fierce opposition from players within the industry since it was announced in September 2020.
Japan’s Softbank acquired?Arm — which has more than 500 clients that use its chip designs, including Apple, Samsung and Google, in products ranging from iPads and mobile phones to cars and smart TVs — for $32bn in 2016.
In a joint statement, Softbank and Nvidia said they had decided to terminate the deal due to “significant regulatory challenges preventing the consummation of the transaction, despite good faith efforts by the parties”.
The cash and stock deal was worth about $40bn when it was announced 18 months ago, but has dramatically increased to as much as $75bn as Nvidia’s share price has soared.
Softbank moved quickly to announce it is to revert to its backup plan of an initial public offering to cash in on Arm, and will receive a $1.25bn break-up fee from Nvidia.
The chip designer, which employs 6,500 staff including 3,000 in the UK, also announced a management shake-up with the chief executive, Simon Segars, replaced by Rene Haas, head of Arm’s intellectual property unit who previously worked at Nvidia for seven years, to lead the publicly listed company.
“Rene is the right leader to accelerate Arm’s growth as the company looks to re-enter the public markets,” the SoftBank chief executive, Masayoshi Son, said in the statement from Arm. “We will take this opportunity and start preparing to take Arm public, and to make even further progress.”
Tweet of the?Week
Serial Entrepreneur
2 年Decentralized looks like the constellation; it’s pretty cool
Bachelor of Commerce - BCom from Nizam College at Hyderabad Public School
2 年??