Web3's Biggest Contradiction 👀

Hey friends!

Lately, I’ve been thinking a lot about what role our current systems will take on as we’re entering into this new era of Web3. Questions like…

“How will our current government structure change?”

“How will grassroots community movements form and sustain?”

“How will wealth become distributed with new forms of ownership?”

…often get me thinking and lead to even more research down the long Web3 rabbit hole.

In my last post where I recapped the a16z State of Crypto report, I shared one of the key insights that stood out to me: Innovation in Web3 will reach an all-time high in the looming recession. At this very moment, there are people like me and you who are actively building solutions to these lofty questions.

In our current system, a solid percentage of tech entrepreneurs feel the pressure to raise money from venture capital (VC) firms in order to scale their businesses. Let’s say a VC firm invests in the company because they think it’s a brilliant idea that will make them some serious cash. “If it ain’t about the money…” - TI & Young Thug (#freeYSL)

Well once the company exits, VC firms can own a LARGE percentage of the company… I’m talking 50-60% or more of a billion dollar company. Now let’s pause and revisit something. In my very first post, I said the following:

“Web3 is about ownership and utility. It puts the power back into the hands of the creators by eliminating third parties and incentivizes community members to contribute to the success of people and causes they care about.” 

When I reflect on this statement above and the current reality of how the most innovative companies are funded, I realize just how contradictory they are. Our current system of funding through VCs is focused on identifying, owning, and controlling the next big company. With greater control comes outsized influence. With outsized influence comes centralization. And isn’t the whole point of Web3 to be decentralized…?!

Now you see the dilemma. Over the next few years, there are three things I’m paying attention to (and hopefully helping to shape 🙏🏽):

• Identifying new forms of capital for Web3 entrepreneurs through DAOs and tokenomics

• Leveling the playing field for Black founders & culture carriers to scale businesses using healthy cash injections

• Reimagining the role of venture capital in shaping Web3

With all of the hype around Web3, it’s important to remain critical of how people are executing on the principles this next technology stands on. In my opinion, that’s the only way we’ll be able to truly reap the benefits of this next phase.

Thanks for indulging me on this topic!

Until next week 🤞🏽

Kendall