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I just listened to the October 28, 2021 episode of the Tim Ferriss Show podcast, titled Chris Dixon and Naval Ravikant — The Wonders of Web3, How to Pick the Right Hill to Climb, Finding the Right Amount of Crypto Regulation, Friends with Benefits, and the Untapped Potential of NFTs (#542).
I’ve been a fan of Naval’s blogs and podcasts for many years, so I was cautiously optimistic going into this 2.5-hour podcast. I was hoping to come away with just one good example of a situation where web3 differentiates itself from web2 by uniquely enabling some kind of product or service to be built. But alas, I came away empty-handed.
There were a handful of moments where I felt like Naval and Chris were coming close to presenting a good example of such a situation, but they just never got there. It was really frustrating.
The rest of this post comes from the notes I took during those frustrating moments where I was hoping for an example of a situation where web3 differentiates itself from web2 by uniquely enabling some kind of product or service to be built, and I didn’t get it. Consider it a followup to Chris Dixon’s Crypto Claims Are Logically Flimsy.
0:26 — Marketing
Chris says: “If you look at people in these web3 communities, no web3 company, no crypto company has ever spent a dollar on marketing. Including Coinbase, I was on the board for years, no marketing.”
But according to its page’s ad library, Coinbase is currently marketing itself heavily on Facebook’s ad network
I’ve already explained my confusion with Chris’s claims about how web3 supposedly eliminates the need for marketing:
[Chris’s blog post is] selecting the top projects, the ones that broke out and achieved viral growth. If we consider the whole ecosystem of crypto projects and NFTs, most projects are languishing with zero users. Just because 0.1% of blockchain projects and NFTs have gone viral, that doesn’t mean the blockchain has a magical marketing engine that millions of musicians can all simultaneously take advantage of.
0:35 — Composability
Naval says: “All the apps in web3 can team up to create any app needed. For example, there was an innovation in DeFi called Automatic Market Makers. Instead of having to have an exchange where you have paid market makers and firms on the other side ensuring liquidity[…], in web3 we created this innovation with DeFi called Automated Market Makers where you can just do it through code[…] Now once you’ve done that in code, and the most famous company is Uniswap[…] then it can just be plugged in / dropped into any application. So if you look at games that are going to come out, games that are web3 based, they’re going to have entire market economies in them. They will have custody solutions. They will have NFTs built inside of them. They’ll be completely composable in that any piece from any other app can plug into any other app permissionlessly. And so you’re building an edifice… it’s almost like building a civilization or a city of interconnected apps, instead of these silos in which the data’s not portable, the code isn’t portable, users aren’t portable.”
And Chris adds: “I think that was great. All I can say is, composability is to software as compounding interest is to finance. It’s sort of this magical thing where if you get it going, it has a sort of exponential hockey stick.”
When you read the above quotes, I hope you can notice which statements are abstract vs specific. The part that I highlighted in bold was the only attempt to describe a specific example of a scenario where web3’s composability magic creates value. Everything else was abstract reasoning.
To support the claim that web3’s composability makes it better than web2 for various use cases, the one example that Naval provides is “market economies, custody, and NFTs inside of games”. Unfortunately, the example is somewhat incomplete, because it doesn’t contrast Naval’s vision of these awesome web3 games with the best possible in-game market economy that Epic Games could create without using any web3 technology. Pitching a new solution without contrasting it to an intellectually-honest description of the next-best-alternative is the most common failure mode of telling value prop stories in general. It’s the failure mode that a big chunk of this blog is dedicated to documenting.
By the way, some context about me personally — I’m actually a huge fan of composability! I can prove it. In early 2015, when React was still a young technology that hadn’t yet made the list of most popular technologies, I tweeted:
How did I know React was such an improvement over previous frameworks? Because I appreciated that its component model was vastly more composable than jQuery or any of the other web frameworks at the time.
So I’m actually highly receptive to Naval and Chris’s claim that composability is a “magical thing”. The difference is that with React, I could point to specific web apps I’d personally built where the React-powered code looked amazing — shorter, cleaner, faster to write, and less buggy — compared to the same web app if I’d written it as best I could without React. I was able to support the abstract claim that React’s composability made it superior to other frameworks by showing specific examples (Value Prop Stories) of web code with React vs with the next-best alternative to React.
I’ve been a fan of Naval’s blogs and podcasts for many years, so I was cautiously optimistic going into this 2.5-hour podcast. I was hoping to come away with just one good example of a situation where web3 differentiates itself from web2 by uniquely enabling some kind of product or service to be built. But alas, I came away empty-handed.
There were a handful of moments where I felt like Naval and Chris were coming close to presenting a good example of such a situation, but they just never got there. It was really frustrating.
The rest of this post comes from the notes I took during those frustrating moments where I was hoping for an example of a situation where web3 differentiates itself from web2 by uniquely enabling some kind of product or service to be built, and I didn’t get it. Consider it a followup to Chris Dixon’s Crypto Claims Are Logically Flimsy.
0:26 — Marketing
Chris says: “If you look at people in these web3 communities, no web3 company, no crypto company has ever spent a dollar on marketing. Including Coinbase, I was on the board for years, no marketing.”
But according to its page’s ad library, Coinbase is currently marketing itself heavily on Facebook’s ad network
I’ve already explained my confusion with Chris’s claims about how web3 supposedly eliminates the need for marketing:
[Chris’s blog post is] selecting the top projects, the ones that broke out and achieved viral growth. If we consider the whole ecosystem of crypto projects and NFTs, most projects are languishing with zero users. Just because 0.1% of blockchain projects and NFTs have gone viral, that doesn’t mean the blockchain has a magical marketing engine that millions of musicians can all simultaneously take advantage of.
0:35 — Composability
Naval says: “All the apps in web3 can team up to create any app needed. For example, there was an innovation in DeFi called Automatic Market Makers. Instead of having to have an exchange where you have paid market makers and firms on the other side ensuring liquidity[…], in web3 we created this innovation with DeFi called Automated Market Makers where you can just do it through code[…] Now once you’ve done that in code, and the most famous company is Uniswap[…] then it can just be plugged in / dropped into any application. So if you look at games that are going to come out, games that are web3 based, they’re going to have entire market economies in them. They will have custody solutions. They will have NFTs built inside of them. They’ll be completely composable in that any piece from any other app can plug into any other app permissionlessly. And so you’re building an edifice… it’s almost like building a civilization or a city of interconnected apps, instead of these silos in which the data’s not portable, the code isn’t portable, users aren’t portable.”
And Chris adds: “I think that was great. All I can say is, composability is to software as compounding interest is to finance. It’s sort of this magical thing where if you get it going, it has a sort of exponential hockey stick.”
When you read the above quotes, I hope you can notice which statements are abstract vs specific. The part that I highlighted in bold was the only attempt to describe a specific example of a scenario where web3’s composability magic creates value. Everything else was abstract reasoning.
To support the claim that web3’s composability makes it better than web2 for various use cases, the one example that Naval provides is “market economies, custody, and NFTs inside of games”. Unfortunately, the example is somewhat incomplete, because it doesn’t contrast Naval’s vision of these awesome web3 games with the best possible in-game market economy that Epic Games could create without using any web3 technology. Pitching a new solution without contrasting it to an intellectually-honest description of the next-best-alternative is the most common failure mode of telling value prop stories in general. It’s the failure mode that a big chunk of this blog is dedicated to documenting.
By the way, some context about me personally — I’m actually a huge fan of composability! I can prove it. In early 2015, when React was still a young technology that hadn’t yet made the list of most popular technologies, I tweeted:
How did I know React was such an improvement over previous frameworks? Because I appreciated that its component model was vastly more composable than jQuery or any of the other web frameworks at the time.
So I’m actually highly receptive to Naval and Chris’s claim that composability is a “magical thing”. The difference is that with React, I could point to specific web apps I’d personally built where the React-powered code looked amazing — shorter, cleaner, faster to write, and less buggy — compared to the same web app if I’d written it as best I could without React. I was able to support the abstract claim that React’s composability made it superior to other frameworks by showing specific examples (Value Prop Stories) of web code with React vs with the next-best alternative to React.
