Nov. 27, 2023

Alex Tapscott and What's Next with Web3?

Before diving into this week’s newsletter, this is just a quick heads up: if you're building in web3, or you know someone who is, the next class of the Techstars Web3 accelerator takes place in Spring 2024, and applications are open now.

As web3 is global and borderless, so is Techstars Web3. Although most of the accelerator content is delivered virtually, the class does meet up in person for a week at a time at the beginning, middle, and end of the program in different cities around the world. Jump on over to the Techstars Web3 website to learn more and apply.

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More Media & Events

Are you an early-stage founder looking for insights into the ever-evolving world of VC funding?

Techstars invites you to join their EMEA event with a deep dive into the current state of the European early-stage VC market. This is your opportunity to hear from top European VCs and gain valuable knowledge to navigate the investment landscape. This is a joint virtual event hosted by Techstars Sustainability Paris, Techstars Berlin, Techstars ABN Amro, Techstars Tel Aviv, and Techstars Web3.

🗓 Date: Tuesday, November 28, 2023

⏰ Time: 17:00 - 18:30 CET / 16:00 - 17:30 GMT

👉 Register here on Eventbrite

Featured Speakers:

Armelle de Tinguy, Partner at Elaia
Shivram Ayyagari, Partner at EQT Ventures
Chris Adelsbach, Partner at Outrun Ventures
Yorai Fainmesser, General Partner at Disruptive AI Venture Capital
Jocelyn Cheng, Head of DCG Expeditions

You’ll also get to meet the Managing Directors of each of the five Techstars programs that are co-hosting this event, including yours truly ;-) The last part of the event will feature topical (sustainability, fintech, web3, etc.) breakout rooms to ask all of your questions about the accelerator programs and of their featured investor. For example, my breakout room will be with Jocelyn Cheng from DCG (Digital Currency Group) Expeditions, who are backing the world’s top fintech and crypto founders.

Discussion Topics:

What are the sectors and technologies prioritized by investors in 2024?
What are the top fundraising mistakes founders make in turbulent times and how can you avoid them?
How do you build a pipeline with top investors as efficiently as possible?
What should your fundraising process look like?
How long should founders expect to close a (pre)-seed fundraise?

Don’t miss this opportunity to gain invaluable insights and connect with industry experts. Register now and mark your calendar for this incredible event!

This Week’s Podcast

Over the summer, my pal Sunil Sharma from Techstars Toronto messaged me on WhatsApp and asked me this:

“Hey Pete, do you know who Alex Tapscott is?”

As I had read Alex’s first book ‘Blockchain Revolution’ back in 2016, I was intrigued, even more so as his second book, ‘Web3: Charting the Internet’s Next Economic and Cultural Frontier’ was about to hit the shelves.

Sunil was in the process of arranging for Alex to speak at Techstars’ Foundercon event in San Francisco in early October, an effort on which Sunil and I were initially working together to get more of a web3 presence at Foundercon. However, as the recovery period for an invasive surgery on my cranky right foot extended past Foundercon, an 11-hour non-stop flight from Dublin to San Francisco was not in the cards. So, thankfully, Sunil and Alex ran with the ball at Foundercon.

In my last call with Alex and Sunil in September when I broke the news to them that I wouldn’t be able to make it to Foundercon, I suggested to Alex that we try to do some kind of virtual book tour event. This week’s podcast episode is the output of that idea!

Listen to the podcast

What’s Next with web3?

When I was setting this one up, I was thinking that with Alex’s recent book tour, he had done a lot of speaking about the new book, so let’s try to take a different approach to this conversation.

So, I wanted to bring in a couple of voices that could reflect on Alex’s sentiment on web3 and add additional context for the audience. As I’m always trying to improve the societal representativeness of web3, I reached out to my network with the goal of having a diverse panel of VCs. Despite best efforts, we ended up with a ‘manel’, but through it all, I’m committed to increasing diversity in tech and venture capital. Hopefully, by just calling it out, I can draw some attention to this that will influence others to do better than me this time around.

The incredibly insightful duo of Justin Swart from BITKRAFT Ventures and Sterling Campbell from Blockchain Capital joined Alex and me for this conversation, which was a live session on Crowdcast (here’s the replay link).

To kick things off, I asked Alex to share his thoughts on what to expect next from those building in web3. That’s a huge question, but Alex had done so much research and had so many conversations in preparing to write the new book, that I knew he’d have a good answer to get the conversation started.

As I expected, this first question triggered the conversation with Alex, Justin, and Sterling on the critical need for accessibility in technology, where web3 user growth would come from, the role of gaming in web3 adoption, alignment of value and protocols, the movement towards decentralized physical infrastructure (DePIN) and the future of blockchain protocols.

Contributors

Alex Tapscott - Author of Web3: Charting the Internet's Next Economic and Cultural Frontier (and ‘Blockchain Revolution’), Managing Director and Portfolio Manager at Ninepoint Partners, a Toronto-based alternative investment manager and Founder at Blockchain Research Institute

Justin Swart - Principal at BITKRAFT Ventures, a global investment platform specializing in Synthetic Reality: the space where our physical and digital worlds converge. Driven by video games and gaming technology, Web3, and AI. BITKRAFT’s portfolio includes Epic Games, Discord and Immutable.

Sterling Campbell - Investor at Blockchain Capital, partners to crypto builders since 2013, with investments including Techstars grad Arweave, Aave, Coinbase, Kraken, and OpenSea.

Top Quotes

Alex Tapscott on increasing adoption of web3:

“The biggest customers for most large businesses are not actually asking to use this technology in the very early days. And I look at the different technologies of web3 - think about blockchains, one of the big benefits of tokens is that you can custody your own assets, you can move value peer to peer. You can be your own bank.

For a lot of people in the world who maybe don't have access to financial services or live in a country where the local currency is hyperinflationary or the financial system is underdeveloped, that's a superpower. And for a lot of people in certain use cases, like say gaming, that's (web3 integration) something that can enrich the experience of playing a game.

But for a lot of people, it's actually a big nuisance. The idea that you would want to be your own bank is something that I think doesn't appeal to, let's say a lot of older, wealthier people in places like North America.

So how do we get from where we are today to where we can be? I think that in this industry, there are three kinds of people. There are missionaries, there are mercenaries, and there are pragmatists.

Missionaries are the people who are pushing the frontier forward. They're the ones who are taking enormous risks and are willing to experiment with things that are still unknown to most people. Mercenaries are the people who see a gold rush, for example, there's a gold rush happening in AI. There was a gold rush in crypto and there will be again, in my opinion.

So naturally, that's going to attract a certain kind of individual. But the people who are going to help to scale this technology are the pragmatists. They're the ones who are going to take the lessons we've learned from web2 on how to build user interfaces and products and empower users in such a way that enriches their experience rather than taking away from it.

That's going to be one of the big challenges and opportunities for a lot of developers and leaders who are in this web3.”

Justin Swart on the impact of gaming on web3:

“Our hope, and what we fundamentally bet the firm on, is that gaming will be the toolset and the mechanism that helps users cross the chasm into this new web3 world.

If you just start at the top, there are 3.6 billion gamers out there. You may think of gamers on very high-end expensive PCs. But in truth, the parent waiting for their kids at school and playing Candy Crush is also a gamer, particularly given the amount that they spend on in-game purchases and in-game items.

If you narrow it down, there are already 2 billion PC gamers out there in the world if you want to talk about more traditional and hardcore gamers. What's ingrained in those kinds of behaviors is stuff that is very aligned with what's happening in the cryptocurrency space. What you're seeing there are gamers living in virtual economies and being used to thriving, working with complex at times, but also simple virtual economies, buying stuff in virtual economies to live in this space.

They’re buying items that they can own or they have ownership of a character they’ve built in an MMORPG (massively multiplayer online role-playing game), for example.

It all goes back to an example that Vitalik Buterin (co-founder of Ethereum) gave on why he created Ethereum, i.e., his World of Warcraft account got nerfed. He was so infuriated that he decided to build a world computer where you can remove these impacts and build something a bit more trustless and a bit more permissionless.

Sterling Campbell on what really matters in web3:

“When we look at things, it's always under that lens of how much longevity something has. A protocol that aligns usage, ownership, et cetera, is one that is venture investable while the more flash-in-the-pan, quick-hitters are ones that we've seen time and time again.

Ultimately, usage and ‘what works’ trumps all.

Something that we've seen with stablecoins, for example, is that people just actually use them and that they find value in them.

They don't care and they have no alliance or allegiance to what protocol they're using. If Tron is the cheapest, they'll use Tron. If Solana is the cheapest, they'll use Solana. Whatever makes this as easy as possible to get to the end result that they're looking for. They (stablecoin users) have little allegiance and I think that that's the most important part because we get so caught up in dogma and touting bags. It's more important to understand, at the end of the day, the use cases trump everything.

Whatever creates the best possible experience for the end user is what will win out.”

Listen to the podcast