SXSW 2022 - Austin, Unbound

One of our founders, George, reflects on his time at SXSW.

We’ll preface this article by saying that we’re not insensible to the contrast between having a good time at SXSW and the terrible events that are unfolding on the ground in Ukraine and other places around the world. Ukraine, in particular, was much discussed in Austin, so please don’t read a lack of contextual awareness into what follows.

We spoke to several Ukrainians who were at SX, Nadya Tolkonnikova from Pussy Riot, founder of UkraineDAO, got a rapturous reception everywhere she went and our taxi driver back to the airport was a Ukrainian student who showed us where to donate, to get money quickly to those that need it most.

We choose, below, to focus on the experience of SXSW and the learnings we gathered around technology. The world is in our hearts as we do so.

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What a joy it was to attend SXSW this year in Austin, Texas. After two years in the pandemic wilderness, the festival burst back into life with excitement about the new frontiers of web3, crypto, NFTs and the metaverse. It was reminiscent of years gone by, when social exploded at the festival with a confetti of apps and activations. In 2022, Austin had a buzz, a concentration of energy; ideas were swapped and expertise was cross-fertilized. When the cowboy raised his hat in greeting, he revealed an Einsteinian shock of hair underneath.

What follows is a messy cake of observations, a collection of ingredients, half-baked and yet to rise. Let’s put the oven on high and see what pops out.?

‘It’s all very new and none of us knows anything.’?Zachary Drossman, Verizon

1. What is the metaverse?

This was the question on everyone’s lips at SXSW, in the bars and barbecue joints but also in the talks that attendees flocked to. At the start of every metaverse panel, the host would ask the gathered experts to define it. Which they did, with a remarkable lack of consistency. We guess this makes sense. The metaverse is not a thing?per se. It’s a collection of ideas and spaces, endlessly interpretable depending on the franchise of the definer.

Those that had a stab at a definition, world experts and savant technologists, left attendees with: ‘a natural evolution of UX design over the last thirty years… connectivity over geographic boundaries… an opportunity to feel… a place of synchronicity… an evolution of the internet.’

This last definition was the most popular, perhaps because it is comforting in its breadth and reassuring in its context of the technology that has come before.

‘It’s a third choice between communism and capitalism.’ Kimbal Musk, Big Green DAO

2. Web3 is a belief system

If you keep up, even just a little bit, with the crypto and web3 world via articles or podcasts, you’ll know that its devotees are in deep. They have fervour in their voices, they have hope in their hearts and their ambitions soar off into the future on the back of unbuilt unicorns.?

In person, that depth of feeling gets dialed up 100x. The quote above from Kimbal Musk, brother of Elon, sums it up. Web3 disciples truly believe they are going to change the world. The panel with Musk, Nadya Tolkonnikova from Pussy Riot and Alex Zhang from Friends With Benefits was like a church service. You half-expected Kanye West to appear with a piano at some point.

‘It’s a supra-national concept… An intense re-wiring of the brain is needed to understand how DAOs work [this I can attest to - they’re insanely complex]. That is really beautiful… I have a vision for what this internet city looks like… How do we rethink what financial capital looks like.’

It was lofty stuff but great fun for us?to spend some time with them in the clouds.?

‘The primary product is the community.’ Kinjal Shah, Blockchain Capital

3. Community is key

Shah’s words echoed all through the halls of the Austin Convention Centre. ‘The community’s the product, the product’s the community’, went the mantra. It was a surprise to find the omnipresent Hare Krishna’ weren’t singing it outside the Centre as well. This was no surprise. Web3, DAOs, even more individualistic NFTs - all these new protocols have a sense of the collective running through them.

The take-out is to design web3 engagement with community at the core. Who is your community? Where do they play? How can you find them, engage them and nurture them? What value can you create for them before expecting anything in return? What are the right systems to use? Do they even exist yet?

The watch-out for brands is that most people aren’t interested in you and don’t want to be part of your community right now. It’s like social media when it first rose up. Lots of brands will rush in and most will get burnt. Those designing from web3 up will succeed. Really interesting, new decentralised brands will be created and only a few legacy players will prevail - as ever, the high-interest ones in luxury, sports and fashion.

‘Community is the superpower of web3… Everyone wants to make friends online… creators and fans in the same room… it’s the modern co-operative movement… something for everyone. You don’t have to be a Level 10 Wizard to contribute… How can we make this as good as possible for contributors?... Exit to community is the DAO version of the IPO.’

‘We need to come out of a scarcity mindset to an abundance mindset as a community.’

Nate Jones, Royal

4. Web3 is a huge unlock for black communities

It seemed impossible to overstate the significance of this. Black communities, for so long excluded from financial systems, are flocking to crypto as a means of building an equitable future. Adoption rates are twice as high in black communities as they are in white ones. This is not surprising when even black churches, who deposit millions of dollars with US banks, can’t get a loan and at last count, there were 63m underbanked people in the US alone.

Blacktag (full disclosure, a Brandtech Group investment) hosted the most enlightening panel of the week on the subject of Black Creators in Web3. Their vision is of black creators around the world joining together through their Black Rose token, creating shared upside for their network and reclaiming their future. Key to this is bringing whole communities up with the creators. Nate Jones from Royal spoke powerfully to the work he was doing in Detroit and Nas’ NFT project with the people of Queensbridge. The watch-out is a perennial one - that individual interests take over from collective ones.

‘The old mentality of competition between ourselves has to stop. We need to start working together… The world is getting browner and younger… Huge franchises are going to come out of this. That’s the opportunity… Independent wealth outside the system… Black artists have told the story of America and can now start to benefit from that… Black art is black money… We’re going to close the economic gap and disrupt centuries of oppression that have kept us minimized.’?

‘We’re still trying to work out how DAOs work.’ Flex Chapman, The Krause House

5. DAOs are hard

At Brandtech Consulting, we’ve been wrestling with DAOs for a while. So much about them is so attractive. They?might?be the future of charitable organisations. They?might?be the future of shared brand ownership. They?might?be the future of solving the climate crisis. All their potential is mitigated, however, by their complexity and current existence outside existing frames of reference. We’ve recommended them to clients and then withdrawn that recommendation. The frontier is a fraught place to be.

The many DAO experts in Austin seemed equally conflicted. On the one hand, DAOs were the greatest thing since sliced bread. On the other hand, they’re incredibly hard work, requiring constant community management and endlessly-refreshed value exchanges to get people to stick around. ‘Progressive decentralisation’ was the watch-phrase of the DAO crew - an acknowledgement that some level of control is necessary to get things up and running. The advice was to start small with a simple group behaviour, make it inclusive, create great onboarding for would-be contributors, incentivise contribution, gradually delegate, have a rotating mayor rather than leadership and grow slowly around a small number of passionate early contributors.

‘Not everything should be a DAO… It’s most effective when you make it feel smaller… A responsibility we haven’t fully figured out yet… Where’s the Nike of DAOs going to come from?… The hardest thing is getting contributors to stick around. There’s so much cool stuff… The best DAOs ramp up very slowly. The quality of contributors is the key… It’s not all sunshine and rainbows. When things aren’t going well, you see who’s in it for the right reasons.’

‘It’s really easy to be dismissive of the seriousness of the effect of misinformation.' Frances Haugen

6. Fix the product, fix Facebook?

There were lots of headline talks amongst the side-corridor web3 sessions. Most of them weren’t worth the time spent in line. They gave you a FOMO-vibe. To spend time listening to a famous person was to waste time that could be spent listening to a crypto-wizard. One exception to this was a great talk from Frances Haugen, the ‘Facebook whistleblower’ or as she would have it, one of ‘a stream of Facebook whistleblowers’.

Haugen was absolutely surgical in her take-down of the harmful effects of the Facebook algorithm, how it incentivizes extreme opinions and gameifies users into sharing them by creating a firehose of addictive rabbit-holes that play on people’s vulnerability. The killer insight that she provided, however, was how some simple fixes to the Facebook product could eliminate almost all harmful effects. Forcing users to click on links before they share them; requiring the fourth sharer to copy and paste a post rather than just re-share it; or putting a mandatory thirty-second wait before re-sharing - all of these measures would be more effective than the human fact-checking that Fb is pushing as a solution.

According to Haugen, Facebook doesn’t want to make these changes because in some countries around the world 35% of posts are re-shares and Facebook’s business model relies on an always-increasing amount of content. Also, in lots of countries Facebook is the?de facto?internet, so hundreds of millions of people’s version of the internet is one spun in a bad direction by algorithms.

Finally, Haugen was mindful of the downsides of the Facebook version of the Metaverse. She saw addiction where others see escape, she saw loneliness where others see community and she worried about a decline in IRL relationships. The other really challenging aspect of VR in?particular, she felt, was its effect on young people’s still-developing eyes. Data on that, this amazingly brave data-scientist said, was only just beginning to emerge.

Austin, unbound

So, that was SXSW 2022. That and so much more. The weather veered from freezing to twenty degrees. There was music and beer and swimming in Barton Springs. Breakfast tacos segued into lunchtime barbecue and fried chicken for dinner. It was the best of times, it was even better than that. Austin was back. The old SX had returned and the dry air was pregnant with new possibilities. Roll on 2023.

Please feel free to comment on any of the above, and if you'd like to find out more about Brandtech Consulting, please don't hesistate to get in touch at [email protected].

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Needless to say, Ukraine is still in our hearts now we are home, as are all other nations riven by conflict.