“Show me the incentive and I’ll show you the outcome”.
While a tad oversimplified, Charlie Munger’s famous one-liner is sort of like the Occam’s Razor of human behavior – especially at scale. People are generally far more driven by self-interest than by any other factor.
Indeed, history clearly demonstrates that while people might tolerate a certain degree of behavioral sticks – they’ll build their lives around the right carrot…
Understanding the potency of this core trait is the basis of power; it can literally reshape the world, or build new ones.
Perhaps the best living example of this is the rise of the United States, whose Constitution & Bill of Rights was explicitly Anti-Fuedal; ensuring citizens had inalienable rights to own property, pursue happiness, and be free from religious interference.
This framework – combined with a truly new frontier – offered adventurous newcomers one hell of a Carrot. And it’s why a rugged, rebellious little outpost in the wilderness in the 1700’s rapidly became the world superpower in just a few generations, usurping Europe’s role on the world stage by the early 1900’s.
Not because it conquered Europe – but rather because it offered a better social contract; a better incentive.
The next new world
The Decentralized Web, also called ‘Web3’, is already a functioning frontier complete with various trading outposts, charismatic pioneers, infamous bandits – and a palpable sense of optimism, even amidst the current chaos.
And as with its metaphorical ancestor, on the surface, Web3 appears to have a lot in common with its predecessor. Just because the apps, websites & communities of Web3 are built on-chain, doesn’t immediately make them much different than “normal” apps, websites & communities.
From a distance, one could argue the same thing about the New World 300 years ago. It’s just another place with people, buildings & farmland. What’s the big deal?
It all comes down to the social framework.
Up until the late 18th century, much of the land in Europe was held by just a tiny percentage of the population – most of it by the Catholic Church, and the rest by the aristocratic class of wealthy landowners. Property usually gave its owners access to political & judicial power as well.
The legal system of that era was designed to provide iron-clad inheritance protections, and made it almost impossible to transfer land to someone who wasn’t an heir. Subdividing the land into parcels for individuals made little sense, since the purpose of landownership was mostly driven by preserving power and not utility or wealth creation.
And as a result, the main effect of this old framework was that it prevented – or at least heavily stifled – social mobility between classes.
Hopefully this provides some context into why the prospect of affordable (even free) land titles for settlers in the New World was so compelling. This ended up being possibly the most powerful USP in human history.
The opportunity for adventurous pilgrims to own land wasn’t merely an economic incentive; it was a total societal reset. Crossing the ocean gave you a legitimate path to change your station in life. This is the real incentive that created new technologies, countless fortunes, new political structures – and a new way of life globally.
Web3 is the digital reincarnation of the New World. And it similarly offers its early pioneers an unprecedented opportunity to own – and shape – the next global superpower.
Ready layer one
After releasing the first iPhone in 2007, even if Apple was given inifinite money & resources, it still would’ve taken a decade before it was physically possible to release the current iPhone 12.
Because, as we discovered in the first Dot-Com boom, new technology can’t really go mainstream until the “plumbing” is in place. In this case, the iPhone 12 is built on the assumption that the world has already built a global 5G network, launched enough GPS satellites into orbit, developed true face-recognition AI, had 10 years of advancements in microchip technology… etc.
The base layer of a new world needs to be ready before you can start building cities on it.
To connect the dots, the “iPhone 1.0” of the Web3 ecosystem was Bitcoin, first conceptualized in 2008 as a decentralized, alternative banking system – and then rolled out via the first blockchain in 2009.
While most people at the time were focused on its viability as a currency (and many still are), the smart folks were a lot more interested in what its underlying blockchain tech might mean for future business models.
Eg. How many “Ubers” could the innovators unlock from an entirely new set of internet physics?
There have been a handful of applications built on Bitcoin’s blockchain, but since it wasn’t originally designed to be “load-bearing” for 3rd party applications, building something on Bitcoin typically makes for a clunky user experience.
The first major step towards a purpose-built blockchain designed to support decentralized apps (aka ‘Dapps’) was the Ethereum network, first conceptualized in 2013, and then later released in 2015.
There’s a lot more to the story, but in a nutshell, Ethereum is increasingly proving its ability as a global, decentralized “world computer” that can legitimately support the Web3 ecosystem, along with everything that entails…
this chains everything
I’ve noticed a trend among the world’s brightest investors, tech magnates, analysts, developers and in general, the internet’s collective intelligentsia as it relates to going down the blockchain rabbit hole.
The enlightenment process usually goes something like this:
- “Bitcoin can never be a real currency because _____, and the blockchain is just a fancy database, big deal.”
- “Okay, I guess Bitcoin is interesting as a ‘digital gold’ asset, but all the other cryptocurrencies seem like scams, and NFTs are just a weird ponzi scheme.”
- “Actually, _____ is pretty intriguing…”
- “Holy F$%&! – I finally understand why a decentralized, trustless consensus protocol is actually going to change the world!”
- “Huge announcement: I’ve just [founded / invested in / joined] XYZ.co, which is going to massively disrupt [something in finance / tech]”
Yes, I’m being a bit cheeky – but I can honestly say that everybody who I consider to be smart & successful that has truly investigated the blockchain opportunity ends up becoming a true believer.
It’s kind of a red pill journey, and you can’t un-see it. Your first trip down the rabbit hole of smart contracts, persistent interoperability, tokenization, and in general the level of business model alchemy this creates in virtually every industry is… well, a lot to process.
So as we start digging into the breakthrough opportunities this is creating for entrepreneurs, perhaps it’s useful to start by sharing my own “aha moment” – when things finally clicked for yours truly…
a metaverse that matters
Usually about once a year, I’ll go on a gaming binge for a few weeks, where I spend the evenings immersing myself in the “alternate universe” of franchises like Deus Ex, Mass Effect or Elite Dangerous.
What’s always blown me away is just how massive the communities are for some of these games… as well as how committed & involved a certain percentage of the player base is.
There are people who will spend literally thousands of hours (and dollars) building custom game mods, fan-focused content, unofficial companion apps, etc. where their only motivation is to simply improve the virtual world for themselves and others.
Extreme examples include people spending 5 figures to acquire special ships in Star Citizen, or assembling a team of volunteer developers to re-texture the entire game world of Deus Ex and then release it as a free mod – a labor of love that took 8 years!
The point is – millions of gamers are incredibly passionate, dedicated and very willing to invest substantial time & resources into digital worlds that they care about… even when there is little or no profit motive.
If you think about it, this is actually somewhat logical; if you spend 2-4 hours a day in a virtual world, it makes sense to optimize the experience with real resources. These worlds are also increasingly replacing social media as the medium of choice for connecting with real-world friends, especially for the younger generation – for whom in-game assets are the new social currency.
A prime example is Fortnite, whose massive 350M+ player base represents nearly the same in-game population as the United States… 85% of whom purchase in-game upgrades, skins, and other downloadable content to the tune of $3.7 Billion /yr in sales.
Those are staggering figures by any measure – but this phenomenal current-state reality is simply the backdrop for what’s to come.
And for me, it’s this backdrop that finally brought the mind-bending implications of blockchain into full focus…
virtual worlds, real economies
We’ve established that millions of gamers are very willing to invest substantial time & resources into modifying, improving & supporting virtual worlds they care about – even if there’s no monetary return on that investment.
We’ve also established that individual games can have populations larger than most countries.
Now, what happens when you give millions of passionate gamers like this an opportunity to become actual digital homesteaders in a gaming world? A world where they can not only own scarce assets like virtual real estate, tradeable in-game loot, etc… but they’re also shareholders and beneficiaries in the success of the entire digital world itself?
And what happens when those same assets are interoperable and provide benefits in other worlds… or even “offline”?
Eg. Where buying an in-game Louis Vuitton item (NFT) also unlocks similar items in totally separate digital worlds… and is also redeemable for luxury goods on the real world LV.com store.
And what happens when owning “land” in a game gives homesteaders the ability to mint their own interoperable NFTs that can benefit other players outside of the game world? Or charge micro-transactions to access a certain in-game experience that’s built on their parcels?
This is where role-playing games become role-playing economies.
And if games like this reach anywhere near the scale of Fortnite, Minecraft & Roblox et al, think about how to appraise real estate that gives you access to millions of digital pedestrians (foot traffic) every day. The opportunity would be akin to buying an acre of Manhattan for $200 in the early 1800’s.
Not to mention, it would also be a mindblowing marketing asset; like owning a a billboard on Times Square. Or perhaps more accurately, like owning a subcategory on Netflix.
Also consider: All it takes is for one game world built on-chain to remotely succeed, and then it’s game over for anything that’s solely entertainment. Think about it – why bother investing any meaningful time or resources into a game world where you aren’t building real world value?
Why work the fields as a peasant when you can cross the ocean and build your own empire?
This beat ’em or join ’em scenario will likely force most major publishers into plugging their worlds into the same economic infrastructure as the leading on-chain worlds. Hence, creating a metaverse of multiple connected realities.
This – and a lot more – is what a blockchain like Ethereum makes possible. And this isn’t hypothetical vapourware. It’s already happening.
Most notably, Tim Sweeney, CEO & Founder of Epic Games (the company behind Fortnite), had this to say about the implications of an open, blockchain-powered Metaverse…
“This Metaverse is going to be far more pervasive and powerful than anything else. If one central company gains control of this, they will become more powerful than any government and be a god on Earth.”Tim Sweeney
Founder & CEO, Epic Games (Fortnite)
It’s worth noting that Epic is actively working on an Open Metaverse project, as we speak. They might know a thing or two about how to build virtual worlds.
Anyway, this was my Damascus Road moment with crypto; where I finally saw the light.
But gaming is just one industry that’s already seeing blockchain-native business models emerging. This will impact virtually every industry. And we’re in the very early innings…
The age of alchemy
Smartphones were a breakthrough device that facilitated alchemy; truly net-new business models like Airbnb, Uber & Pokemon Go.
They did this not by fully understanding everything that their device could eventually enable – but rather by creating a new set of physics from which new businesses could evolve. In this case, the building blocks of life were in the form of a singular connected device sporting a digital camera, a GPS, high-res display and a capable processor.
Web3 has similarly provided a novel set of internet physics from which new life can evolve.
Namely, some of its key properties include an ecosystem where, by default, whatever you create is instantly inter-operable with anything else on-chain, and where there’s a permanent public record of ownership of things like tokens, contracts, policies and a range of other assets.
In this section, we’ll explore some of the novel possibilities that Web3 facilitates, as well as profile some of the business models already emerging.
To set the stage properly, let’s first cover the key building blocks that make all of this possible; which will be essential for understanding why the subsequent opportunities are now valid…
We don’t have the bandwidth here to cover this in depth, but for the sake of context as we explore what is an exotic new world for most people, I think an abbreviated glossary of Web3’s key building blocks is warranted…
- Blockchain: A distributed, transparent ledger that acts as a permanent record of activity for various actions and events in an ecosystem.
- Cryptocurrency: The currency of a given blockchain (eg. $ETH is the currency native to the Ethereum blockchain). Currencies are used to perform transactions on a blockchain and can also be traded for other currencies, including fiat currencies like $USD, on various exchanges.
- Crypto Wallet: A “wallet” is basically user ID & password for being able to access and control on-chain assets that you own. Various apps exist to manage these assets, and you can also alternatively use platforms like Coinbase as a digital intermediary vs managing a wallet directly.
- Token: A token is sort of like a “sub-currency” on an existing blockchain, and is programmable money with some sort of utility, such as being able to access an app, stream content, purchase in-game or in-app items, etc. Tokens can also be used to represent a share in assets both virtual and physical, and can be programmed to do things like decrease/increase in supply, be distributed to users who do certain tasks, track 3rd-party asset values (eg. commodities) and a lot more.
- NFT: Acronym for non-fungible token, which is a token that represents unique, non-replaceable items – such as a specific parcel of land in a game, a specific collectable item, or an interest in a specific business or asset, whether virtual or physical.
- Smart Contract: A self-executing “if/then” program stored on the native blockchain that runs instantly, but only when certain conditions are met. They are the foundation of Ethereum, and make it possible to build software & services that are permission-less and trustless by default – meaning you don’t need anyone’s permission to do something, and you similarly don’t need to worry about trusting a counterparty to fulfill a given agreement, it’s all handled by the underlying operating system.
- Dapps: Decentralized tools, software, games or any other blockchain-based application that natively connects to a blockchain like Ethereum. There is typically no user registration or “login” process to use Apps, as they simply synchronize with your Crypto Wallet and automatically interact with your on-chain assets.
- DeFi: Refers to the decentralized finance industry, including various finance related Dapps. The main draw of DeFi is that it allows retail traders to access exotic financial services & capabilities normally reserved for huge institutions and hedge funds.
- Metaverse: Broadly speaking, the metaverse refers to the overall experience of interacting with a range of different apps, games, services, devices, augmented realities and so on with a persistent avatar or user ID – where the user’s core assets / contracts / conditions are recognized in some way by each on-chain modality.
- DAO: Decentralized autonomous organizations are basically the crypto version of an LLC. The best description I’ve heard is that DAOs are essentially a subreddit with a mission statement and a bank account.
I’m just scratching the surface, but hopefully this informal glossary helps to fill in a few gaps as we head into the next section…
new life forms
Now that we’re equipped with the basics of how Web3’s DNA functions, let’s highlight some of the new capabilities and business models that are beginning to evolve.
Each of these has surfaced as some of the most compelling opportunities in Web3 that I’ve encountered during my trip down the rabbit hole thus far. Some of these are still conceptual, while others are already emerging innovations.
They’re listed here in no particular order…
When you create any app or experience native on a blockchain like Ethereum, it’s designed to instantaneously interface with a user’s wallet – which is just a “key” to their assets already stored on-chain.
In Plain English, what this means is that when someone visits your Web3 website/app using a Dapp browser like TrustWallet – or if you simply install a Chrome extension like MetaMask – you don’t need to create an account to use & access Web3 apps & services.
Just like a 0auth onramp (eg. “Sign up using Google”), you can connect your blockchain ID to a service in one click, which means that you can now process transactions, acquire or sell assets, and otherwise interact with the app in various ways.
For consumers, this provides a level of optional anonymity that simply isn’t possible using a conventional credit card. You’re just spending digital cash in a P2P setting.
And most disruptive, for merchants & creators, this means that there’s no approval process or “asking permission” required to set up a merchant account / payment gateway and start your business, because there’s no 3rd party.
If you can build a Dapp, you can now start taking payments and offering smart contracts – instantly. Simple as that.
This may not seem like a big deal for creators & startups in first-world countries – where services like Stripe & Paypal have become fairly seamless & merchant-friendly. But if you’re in the 3rd world – or otherwise in a business where getting a merchant account is difficult – this is a HUGE deal.
Yes, there are some caveat emptor’s here to be sure, but on the whole, this provides a ton of opportunity to the would-be internet entrepreneur who simply wasn’t privileged enough to be born in a country or versed in an industry where “going digital” is easy.
Push-Button Angel Investing
The process for actually investing in a Dapp or on-chain project is equally as simple & instantaneous as paying for a product or service. You simply buy tokens instead.
Tokens are programmable “side currencies” that also act as a proxy for equity, but they can have a number of other uses as well, which I cover further down. Tokens will generally track the market cap of the issuing project / business, which is why you can see huge runs in value appreciation as network effects occur and something gains traction.
For example, user-investors of FileCoin (an on-chain Dropbox alternative) who purchased $FIL tokens in 2019 have since seen their equity increase by about 25X. Filecoin uses their token to incentivize “miners” that provide their own devices as part of the storage cloud.
There are often added incentives like additional yield, dividends, etc for staking & providing liquidity, especially in DeFi applications, meaning that your tokens can appreciate in value faster, or generate yields over & above the baseline market cap valuation.
The key takeaway is that tokenization lets anyone effectively become a VC investor in crypto projects & startups of any size, in a matter of seconds. This is obviously fraught with risk and volatility – but can sometimes lead to substantial wealth events as well.
In a world where Gen Z’s & Millennials are increasingly being priced out of conventional equity vehicles like real estate – tokenized assets are a very compelling alternative.
Permanent, Portable Audiences
I’ve lost count of all the various “Death of Email” headlines I’ve seen over the years…
First it was going to lose relevance to the social media newsfeed. Then it was going to become a pay-to-play channel thanks to Gmail’s promotions tab. Most recently, it was going to be eaten by FB Messenger and other chat platforms.
As usual, Facebook couldn’t help itself and throttled + paywalled Messenger almost immediately, making it an uninvestable channel.
There are legitimate challenges around email deliverability and inbox visibility to be sure. But it is far from dead – and I suspect email will remain intact as a core pillar of the internet experience for a long time.
This is because, so far, your email list has been the only decentralized marketing asset you can truly own and “take with you”; you can’t be de-platformed or cancelled from your own list. (Something that even the leader of the free world has recently discovered).
However, for the first time in 20 years, email as a channel is about to have a legitimate peer…
One of the possiblities that arise from a user’s Wallet ID being persistently connected to anything else on the same blockchain is that opt-in relationships between IDs (eg. followers, customers, subscribers) can similarly be ported, instantly & seamlessly, from one app / service / experience to any other.
In plain English, if you follow someone on “Crypto Twitter”, it would be easy for the developers of “Crypto Snapchat” to automatically import that relationship & status if you start using their Dapp.
This has profound implications and opportunities for Marketing 3.0…
- Import Your Contacts… Anywhere.
This is the most obvious benefit, and as described, it means that any platform that enables seamless “audience imports” essentially creates an internet where your influence can evenly extend across any medium or channel.
- User-Level Ad Targeting… and Direct P2P Compensation.
Think about the level of precision this could create for “retargeting” in Web 3.0… since you’ll have granular control at the individual ID level.
And another huge possibility? Platforms could do revenue sharing with their own audiences, where some % of advertising revenue is directly paid to users. (Think that might incentivize repeat visitors?)
- Direct Data Management.
In this new paradigm, it would be necessary for personalized data management platforms to spring up where you could easily manage your subscriptions to various influencers, advertisers, etc. For once, this would be totally under your control – and you could even do things like set your own minimum bid ranges for being reachable by advertisers on various platforms, etc. (A much better alternative to ad blockers).
- Network Effects Made 100X Easier.
It’s a pretty daunting task to start from zero as a newcomer as a media brand or social network in today’s ecosystem. But imagine if you had the ability to “pre-populate” the entire social graph of a blockchain into your Dapp or Platform from day one? Incredible.
(Yes, there are some safeguards to figure out here – but this is one hell of a feature regardless).
As someone who’s been in the marketing game for decades now, I can honestly say this Email 3.0 Concept in particular – even in its unformed, theoretical state – is the most exciting thing I’ve encountered in years.
This is a gamechanger. Early adopters who can successfully establish decentralized blockchain audiences will build the world’s most valuable attention economies for the internet’s next chapter, without a doubt.
I touched on this above, but another thing to consider is how tokenization can be used to drive phenomenal growth & engagement by automatically incentivizing users of a Dapp or Platform.
- Revenue Sharing & Royalties
You can build revenue sharing into the “tokenomics” of your Web3 project so users with some predefined level of activity are actually paid to visit / use your site. You could also automatically pay royalties based on certain outcomes, eg. content going viral, etc. (Steem is a real-world example)
- Digital Homesteading
You could “gate” revenue sharing / other benefits so that the full % share is unlocked over time, or unlocked at key events – just like how early immigrants to the New World had to stay on the land for a certain period of time before they earned title to it.
- Play to Earn
One thing blockchain makes possible is for microtransactions in gaming to flip around, where players don’t pay to unlock the game; rather the game pays players to use it. One recent example is Axie Infinity, which made the news this year because thousands of people in the Phillipines were able to earn more from playing the game than they could with conventional local jobs.
More than anything else, turning users into owners by default is simply the ultimate growth hack; this fundamental USP is why crypto is exploding in general – it offers people substantial opportunity, and it connects what they do online to their own direct betterment in real life.
Could you imagine if Amazon gave its customers a 2% “cashback” on their purchases, but in the form of Amazon stock? Many of its first customers in the early 2000s would literally be millionaires in 2021, just for buying a few things a month.
Think about how much real loyalty & advocacy that would generate for virtually any brand. And this is just one example of what tokenization makes possible.
No doubt you’ve read about the ridiculous NFT craze this year, where literal jpegs are selling for millions of dollars in some cases.
(Don’t worry, I join you in thinking this is batshit crazy.)
What’s lost amidst the shock & awe headlines, though, is that NFT’s are likely to be the most formative business model catalyst in the entire crypto space. This is because they provide a way to prove ownership to unique digital assets, and prevent counterfeits.
One of the ways that this gets really interesting is when digital NFTs also give its holder the right to redeem or access physical items, property, services – and so on.
This is known as Digi-Physical, and MetaFactory has a good writeup on it as a primer.
A simplified example is purchasing in-game NFTs that outfit your character with unique clothes, such as sneakers. Brands can collaborate with games like this to offer in-game NFTs that are then also able to interoperate with other Dapps / websites on-chain.
Which means that if you outfit your character with, say, “Nike sneakers” in a game, it would be easy for Nike to build a Web3 connector on Nike.com that would automatically pre-populate your cart with a pre-paid order for the physical version of those same sneakers, shipped to your door.
As you can imagine, the sky is literally the limit here as far as how this might bridge customer experiences & product strategy between worlds.
Expanding again on NFTs, one of the most interesting concepts emerging lately is around the Creator Economy – particularly in looking at novel ways that artists, musicians, authors and so on are now able to supplant industry middlemen and pre-program their works to generate royalties perpetually.
For example, for the first time ever, creators can now sell works as NFTs that are hard-coded to generate royalties from all future resales, in perpetuity. This means that every time one of their works is re-sold at auctions, on a marketplace, on streaming services, etc. the actual creator is compensated directly, along with the new seller.
This has the potential to completely re-shape creative industries, along with the business models of distribution.
It can also work in reverse to incentivize word-of-mouth marketing, as well as to reward early supporters; creators could also do things like program their NFTs to pay royalties to the first customers of a work, or every customer who purchases an album in the first year… etc.
The sky is the limit, once again – but this is the kind of fundamental structure that can transform entire industries.
Air Miles of X
Expanding on the Engagement capabilities mentioned earlier, one of the most interesting features baked into Web3 experiences is the ability to detect assets held by any given Wallet once it’s synched with a Dapp.
What this means is that as a developer / publisher in Web3, you’ll be able to build “if/then” processes based on virtually anything that your users have ever purchased, sold or done on the blockchain.
Again, as with NFTs, this is a blue-sky opportunity with a million different use-cases, but one that leaps to mind is the ability to create loyalty programs (like Air Miles) that rewards users for patronizing certain 3rd party businesses.
This is obviously a huge conventional B2C business model, but typically requires a ton of relationship-building & negotiation just to put the offers together, let alone manage it all.
The blockchain precludes anyone’s permission. You could use the “Air Miles” model to incentivize massive audience growth around brands & products that don’t know you from Adam… and this lets you build hyper-targeted audiences of specific buyers, no less.
Eg. Everyone who bought X from your competitor can unlock Y benefit from you.
This is insanely powerful for building targeted incentives into your marketing strategy.
Tailored Messaging on Steroids
As a direct expansion on the above, think about what I just laid out re: user intelligence…
The blockchain lets you transparently see everything your users have ever done on-chain. Everything they’ve bought, sold, transacted, used, or interacted with.
Think that might be useful for generating relevant automation sequences?
Also – where my mind goes is immediately towards MarTech business ideas. Who will build the first “ActiveCampaign” of Web3?
The capabilities are going to be astonishing.
What if we apply the same profiling capabilities described above towards a different objective: recruitment. And what if instead of looking at purchase behaviors, we look at specific tokens / NFTs issued by educational platforms, academies, talent pools, workplaces, freelance networks and so on?
That’s a whole other section of blockchain opportunity; decentralized accreditations. Let’s say someone completes certain tasks for an employer, or successfully passes a certain course / academy. If there’s a “badge” issued to the service provider on-chain, then that presents a number of interesting capabilities.
For example, you could automatically pre-screen candidates for a job based on provable, associated accreditations that must exist in their wallet before they can even apply for a position.
Or, for gig work & fixed-term contracts, you could even go a step further and pre-approve providers if they have certain accreditations or proofs of completion. (See this in action at 1729).
This means that certain forms of hiring could actually be instant, automated and effective. Wild.
VRE as a Channel
In the previous section I mentioned that my “aha moment” around crypto in general was realizing that owning virtual real estate in gaming environments could be the ultimate, evergreen marketing channel…
To put a point on it, Fortnite has 350M active players. Minecraft has 140M. Apex Legends has 100M. And the list goes on.
The point is, virtual worlds are already places where a lot of people spend a lot of time. And when mainstream worlds like this start to build on-chain, then the opportunities for building experiences that potentially millions of people can interact with every month is astounding.
Think: Selling gamers unique, in-game NFT “wearables” that can also be redeemed on your own ecommerce store (outside the game) for real wearables via Print-On-Demand fulfillment, store credit, memberships, etc. This will become a huge acquisition channel for smart brands.
I’m keeping a close eye on Epic Games, as I think their entrance into the blockchain ecosystem will be game-changing, pun very much intended.
Another very interesting development in on-chain VRE is that of augmented overlays of real-life coordinates, buildings, locations, etc. This is very early stage, but check out projects like Overland, SuperWorld and Earth2, which basically allow you to “own” coordinates anywhere in the world, letting you create geo-specific content for app users in those physical locations.
Think: Providing users with on-location tours of key landmarks, airports, geocaching-style rewards (eg. go to X business to unlock Y) or even just memorable 3D content that’s geographically useful to your ideal audience + a brand asset for you… aka a useful billboard.
All of this is on the precipice of scaling. When it does, be ready… I cannot overstate how massive this opportunity is. It is akin to buying parcels of Manhattan back in the early 1800’s – especially considering the interoperability that these games will have with each other.
* Disclosure: I own virtual land in SandBox.
adding a fourth dimension
In general, the Metaverse of the blockchain ecosystem truly provides an extra dimension of interaction in how we’ll use the internet, how we’ll do business, and how we’ll run our lives.
It’s particularly this interoperability and overlap between our digital apps, services & devices that will become as second-nature as swiping a screen on a phone… which creates a whole new world of opportunity for entrepreneurs.
The Metaverse doesn’t need to be The Oasis from Ready Player One to be world-changing; it just needs to reshape incentives, which it will do by making its users owners & beneficiaries of the virtual worlds they’re building, growing and supporting.
I predict that we’ll start seeing these business models becoming mainstream by 2023/24 – which coincidentally aligns with Apple’s long-awaited release of their AR glasses, another likely breakthrough device that further closes the gap between our physical & digital lives.
Bottom line: This is the tip of the iceberg, and these are still early innings. Most of today’s projects will flop as part of the relay-race of mass adoption. But as you can hopefully see, the opportunities emerging for entrepreneurs are almost violently compelling.
It also represents a massive disruption of the status quo by attrition rather than conquest – just as how the US first rose to power. And this mass adoption, while rapid, will not be smooth sailing…
wars of digital independence
I’m unsure if Britain, France & Spain et al truly had a full understanding of how the balance of power had shifted to a new trajectory by 1776. Historical events suggest otherwise.
In contrast, I think most governments, financial institutions & dominant tech companies are increasingly aware of the looming disruption & creative destruction that the blockchain economy poses.
Governments are concerned about losing fiat currency relevance and taxation pipelines. Banks (should) feel threatened by the rise of DeFi. And if Facebook’s attempt at launching Libra is any indication, Big Tech is definitely cognizant of the budding consumer-investor paradigm shift, and what that entails.
Where this differs from 1776 is that these three sectors (Gov’t, Banks, Tech) can ironically choose to benefit greatly from blockchain adoption; it’s just a matter of what stance they take. They can either fight the future, embrace it, or – what I fear most – control it.
This week’s haystacking debacle in the Infrastructure Bill with a handy little clause that could’ve unintentionally torpedoed half of the US Crypto industry is just one example – and it’s also just the beginning.
We are in for one hell of a ride as the incumbent giants – with all of their money, influence & political power – aim their crosshairs at a nascent frontier comprised of pirates & pioneers, and battle to control it, water it down, or outright ban it.
I predict many years of tumult & near-extinction level events, but I think there’s enough global incentive to drive this forward. And ultimately, democratic governments are going to cater to its voters… who are increasingly going to be pro-crypto.
In addition, where some governments do move forward with banning or effective bans via regulatory overreach, other countries like El Salvador, Paraguay, Estonia, etc will be waiting with open arms to accommodate “digital refugees”.
So, Crypto is going to survive, one way or another. But it’s going to be a wild ride, and there might be a few regulatory wars of independence before things normalize and settle out.
This is going to create a lot of volatility and extreme swings in valuations & adoption cycles. But this is where the biggest opportunities are going to be found, as well.
Buckle up 😉
front row seats
I’ll be honest: over the last few years, I had been slowly growing disinterested in internet marketing as a whole.
It’s not that there isn’t still a ton of opportunity for internet entrepreneurs – there absolutely is. But as I mentioned in Part 1, it’s just so consolidated & controlled at the moment by the giants. And despite record traffic levels, it’s never been more expensive to acquire a customer; it just feels stifling.
Diving into Web3 the last few months – and getting a clear picture of what’s really becoming possible – has been an absolute joy. This is the first time I’ve been genuinely excited about anything online in a long, long time.
And it reminds me of when I first got into the business – back when nobody had a clue what I did for a living. Back when it was still the Wild West.
Back when it still felt like I was on the cusp of something huge & undiscovered…
Yes, the Crypto / Web3 space is a bit crazy, and there’s a lot of kinks to work out. It’s still in the “fur trading stage”, it’s rife with speculation, business models are in their infancy – and there’s a lot that needs to happen before it reaches mass adoption.
But this is also why it’s so exciting. In my opinion, it’s just transiting the threshold of being too early, and becoming truly ground-floor. Which means that over the next 6-18 months, we’re going to start seeing the proverbial “Amazons” and “Netflixes” emerge from the chaos.
And riding just one of those waves as an entrepreneur can be life-changing…
After releasing the special report on B2B Matchmaking, my plan this summer was to dive into Web3 and get a report out on it for September.
I quickly realized that a report is simply the wrong format for covering an opportunity of this scale, at this stage, and with so many moving pieces.
This is not a singular strategy or tactic. This is the internet’s third act. Kind of difficult to condense into a report 😉
So I’ve decided instead to change the format of Insiders from a mastermind group to a living, breathing signal service – sort of like the Motley Fool’s Stock Advisor, but for internet entrepreneurs.
This way, we can release regular updates and post new opportunities (as a short brief) as soon as we discover them across 3 main streams:
- Market Opportunities: Emerging trends & market gaps that are highly compelling and largely untapped.
- Firehose Channels: Drive massive traffic & customer acquisition by tapping into growing, yet overlooked platforms.
- Growth Assets: Secure digital assets & virtual real estate that can pay huge marketing dividends for years to come.
This format is also the most logical way to deliver insights around volatile, fast-moving areas like Web3; it means we can be flexible and share new insights same-day vs. taking weeks to create a full report.
To be clear: Web3 is just one area of several that we’ll be covering. I realize that things are still early, and that there isn’t too much in the way of immediately actionable strategies just yet. (But that is changing by the day).
Insiders will still be full of things you can exploit right away. Over time, this will naturally shift towards Web3 opportunities, as they become viable.
And we’ll still be releasing special reports for huge, asymmetric market opportunities a few times a year as well. For example, I’ll be re-launching the 2021 version of the Conduit Method shortly; something a few folks might find interesting.
But Insiders will be the home base going forward. I’ll have more details on this (along with an official waitlist) in the coming days.
Well friends, we’ve arrived at the end of our initial expedition in the New World.
I hope you’ve found it exciting, compelling – or at the very least – somewhat educational.
And I hope you’ll join us in the coming weeks & months ahead as we continue exploring this new, volatile, dangerous, and wildly lucrative frontier.
I think we’re on the precipice of witnessing something truly transformative. The internet is undergoing an internal revolution that will, once again, change the physicis of how the world works.
It will be chaos. There will be monstrous opportunities. And my mission is to provide front row seats and top-shelf insights as it all unfolds.