Web2 is built on advertising. Big companies like Facebook and Google make most of their money on advertising, and many web2 startups build their customer base using advertising.
When you build a business on advertising, the theory is that if you retain enough customers, the long-term economics will work out and you’ll eventually be profitable.
However, there are a bunch of reasons that in practice this can be dangerous. @bgurley covers this well in this classic post abovethecrowd.com/2012/09/04/the…
Web3 takes a different approach by letting users and builders participate in the growth of networks as genuine owners.
Instead of the value and control accruing to a company at the center, it gets distributed out to the edges, to the people who actually build the network.
This means you no longer need advertising.
Tokens are self-marketing. When someone genuinely owns something and feels skin in the game, they want to evangelize it.
Bitcoin is the ultimate case study of this: a trillion-dollar network that was built through community-led evangelism and R&D.
(This couldn’t have happened without social media. In the pre-social media days, it was vastly harder to do bottoms-up evangelizing. In this way, web2 enables web3.)
Removing advertising, and relying on community-led R&D, transforms the economics of internet services. This enables web3 services to have zero or very low take rates.
This is also why the token distribution mechanics are so important. The key is fostering a genuine community— and distributing ownership to the people who do the hard work of actually building the network.
Also, self-marketing networks are a very powerful force.

In the good case, this force is paired with a genuinely useful network.

That has not always been the case, leading to memecoins and such.

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More from @cdixon

26 Nov
There is a widespread view that the internet and software industry is now mature, that the historical pattern of disruptive revolutions every 10-15 years is now over. 🧵
Ben Thompson provides an excellent articulation of this view (as he often does) stratechery.com/2020/the-end-o… Image
In my experience, this view is tacitly held by most of the establishment: institutional investors, tech execs, policymakers, media, etc. It affects valuations, corporate behavior, media coverage, and policy making.
Read 19 tweets
25 Nov
Let’s say you run a startup that has a successful product, and you are now considering what product you should build or acquire next. 🧵
Something I find useful is mapping out the typical economic loop from start to finish, and then considering the startup’s position within that loop.
I’ll explain by looking at the current internet landscape and the strategic position of Google, Facebook, Amazon, and Apple. (I’ll adapt this to web3 in a future thread.)
Read 17 tweets
23 Nov
“Present state of emerging tech has flaws” is not a good argument against that emerging tech.
Serious tech movements are processes that play out over many years.
A good faith critique distinguishes between fixable, temporary weaknesses from fundamental limitations.
Read 6 tweets
21 Nov
The myth of "ETH killers" — why demand for blockchains will always outpace supply 🧵
For every important computing resource in history demand has outpaced supply. This includes CPUs, GPUs, memory, storage, and both wired and wireless bandwidth.
The core dynamic of computing movements is a mutually reinforcing feedback loop between applications and infrastructure.
Read 16 tweets
14 Nov
A very common experience in crypto/web3 is to have a friend who was previously dismissive — “it’s all scams” — become a convert after “going down the rabbit hole.”
It’s not a coincidence that people who have this experience almost always refer to a rabbit hole, popularized by the book Through the Looking Glass about Alice in Wonderland, where the logic and ideas are reversed on the other side of the portal.
Because once you dive in and learn about all the interesting things in web3, it’s the opposite of what you were previously told.

What’s actually a breakthrough for building trustworthy services on the internet is incorrectly portrayed as a haven for ponzis and scammers.
Read 8 tweets
12 Nov
Software has an extremely rich design space — closer in the breadth of possibilities to creative activities like fiction writing than traditional engineering.
Therefore, universal negatives like “there will never be great software created in category [x]” should be interpreted as analogous to “there will never be a great novel written in genre [y]”
If you want to bet against human ingenuity and creativity, go for it — I’ll take other side of that bet. 😉
Read 5 tweets

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