Li Jin began investing in what she called "the passion economy," with part of her thesis being that new marketplaces and platforms would enable more people to make their living via the internet. Some of her early investments when she began her venture career at Andreessen Horowitz included the newsletter platform Substack, and internet patron site Patreon.
However, as time went on, she realized that part of that vision of people earning on the internet could include the users becoming part owners of those platforms themselves, as was happening with a number of crypto or web3 platforms. (By this point, she had also started her own venture fund, Atelier Ventures.)
Meanwhile, Jesse Walden, also an alum of a16z, had started Variant Fund, which had a similar thesis to Jin's. He had started his time in the blockchain space as an entrepreneur, building Media Chain Lab, which was acquired by Spotify and was focused on making all kinds of digital media assets such as songs, vidoes and images similar to Bitcoin in that they could be owned independently of any third party. Prior to that, he'd been an artist manager for musicians such as Solange Knowles and Blood Orange.
After co-investing a few times, ultimately, Walden and Jin realized that they had similar visions, and so they joined forces and are now both cofounders and general partners at Variant.
"The thesis of the passion economy as mentioned was really rooted in how do we enable people to not just do really rote task-based gig work, but to actually allow themselves to express their individual duality, leverage their creative skills, leverage their intellect and education in order to make money on the internet," says Jin in the latest episode of Unchained.
One of the problems she saw with web2 passion economy was that many of those platforms did not actually compesnate their creators directly. With the exception of YouTube, which does share revenue with the creators on its platform, many others require the brands to seek revenue outside the platform whether via sponsors or Patreon.
Walden, similarly saw issues with web2 models, calling out music as being "the most criminally undervalued and under monetized media-type relative to its consumption." He also watched web 2.0 and felt, "Everyone who posts content to social media is, is creating something of value to the platform. It's not just musicians and, and, you know, artists in the traditional sense, we're all creators."
But it was not possible for all of them to participate in the financial upside of building those platforms -- it accrued to the employees of the company who received stock options.
Looking at crypto networks, he "realized tokens are this internet-native way of distributing value." That eventually led him to the investment thesis of Variant.
Given his background in music, he says, "NFTs are going to be the default port of entry for every single piece of media on the internet." He believes this because NFTs make it possible for an artist of any kind to make any of their creative works own-able. And that makes them sell-able for the artist.
He also sees a benefit for the fans as well -- a model he calls "patronage plus." That means, if a fan supports the artist and buys one of his or her works, the fan can also benefit from the possible appreciation of that work.
"That that's another reason NFTs will become a port of entry -- because the collectors, the buy side of the market, it's better for them too," he says. Finally, he believes the shift toward web3 models is inevitable because they're also better for developers.
However, as is well-known, many prominent people, such as former Twitter CEO Jack Dorsey, who is currently CEO of Block (rebranded from Square, which, disclosure, is a former sponsor of my shows), are quite critical of Web3, saying that it is mostly owned by venture capitalists who are taking advantage of smaller retail investors.
Walden's response mentioned that Block's ownership is mostly financial institutions. "I'm very confident saying web3 offers users the opportunity to participate in the platforms and the products and services they use every day."
Tune into the full episode to find out:
how they think founders should approach building a decentralized network
how tokens should be allocated to VCs in crypto projects
how they would respond to former Signal CEO's criticisms of how web3 isn't actually decentralized
why they think there's such a backlash against mainstream companies and groups that announce crypto/NFT initiatives -- and more!
If you're interested in learning more about crypto and Web3:
🚀 join Unchained premium, featuring a premium-only Discord group, access to premium-only interviews and other content ($2.99/mo or $29.99/year from now until February 14, when the price increases to $4.99/mo or $49.99/year)
💌 sign up for the Unchained Daily newsletter, which comes out Monday-Friday
and/or 📚 buy my forthcoming book, which is all about Ethereum and the 2017 ICO craze, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze