Today marks one year at Rostra, where I’ve had the incredible privilege of working alongside Lulu Meservey to help some of the most consequential companies of our time tell their stories.

Before joining Rostra, I spent the first few years of my career in early-stage venture capital, hanging out on the internet and writing about the things I learned along the way. Writing was a tool to force clarity of thought, and it often opened the door for me to meet founders in emerging categories.

Over that same period, narrative and storytelling began to emerge as one of the most important areas for investment by founders. The information environment changed dramatically, and it’s unrecognizable now compared to just a few years ago.1 The concept of going direct was fringe last year; today, it’s table stakes.

By a stroke of luck, good timing, and a well-written cold application, I found myself at the center of this shift last year, with zero comms experience and a dream. Since then, Lulu’s taught me a lifetime of invaluable lessons about comms,2 but recently, I’ve found myself reflecting on how many of those lessons can also be applied much more broadly. Comms, as it turns out, is a lot like life.

Here are a few of those life lessons after one year at Rostra:

Your words create your reality

And God said, “Let there be light,” and there was light. God saw that the light was good, and he separated the light from the darkness. God called the light “day,” and the darkness he called “night.” – Genesis 1:1

On the first day of creation, the first thing God did after separating light from darkness was give them names.

Your words shape not only how you see the world, but also how other people see it and position you within it. Narrative is your shortest path to bending reality.

For as much as we joke about technology CEOs trying to build God, they’ve actually done a good job of getting this right. Great leaders know to place themselves at the center of an important thesis or problem, such that they have a gravitational pull for talent, customers, and investors. Consider how Coinbase’s mission statement is not to help you trade internet money, but to increase economic freedom in the world. I’m sure there are plenty of people at Coinbase who specifically want to work on building excellent crypto products, but I’d bet there are just as many who care even more about economic freedom and working under the leadership of a founder on that mission.

In life, language is similarly the tool to help you construct meaning from experience. What you think is what you say, which is what you do, which is who you are.

Hedge and you’ll miss it

For many of the companies we work with, talent is often the top operating priority, making recruiting one of the main areas we direct our efforts with comms.

One thing I’ve learned from crafting messages to reach recruits is that great talent doesn’t want to work for a middling company. People are inspired by missions both important and difficult. It’s not enough to shoot for the moon anymore; you could be working on getting to Mars.

Part of this is because technology has enabled exponentially larger outcomes. Things that would take months last year can now be done in a weekend. You can have a billion-dollar company with a ten-person team.

But I also think this technology acceleration has made us more acutely aware of how quickly time passes. At some point you were closer to the last time than you were to the first time, and you didn’t even know it.

I love the way my friend closes his Substack posts:

In companies and in life, you have to be giving your maximum effort toward the things you care about. There’s actually no time to be doing anything less.

Take care of your own house first

One of my favorite lessons from Lulu is that you can get a good pulse on the culture of a company by how much of their sensitive information gets leaked to the press.

Strong companies cultivate a culture of internal trust and discretion, where employees learn about major decisions from leadership first. If that breaks, and employees start learning about company updates or problems from reporters instead of their own team, it teaches them that the media is more reliable than their employer for getting the truth. This creates a dangerous cycle where more people feel justified taking sensitive information outside the company.

Companies fracture internally far before they do externally, and leaks are often the first visible sign of that breakdown. The implication here is that internal comms is much more important than external comms, especially because the ability to retain talent is existential.

In life, the lesson is the same. Relationships are built on trust. Gossiping is usually a sign of insecurity, and the status afforded by spreading secrets is inherently short-term.

Relationships might be breaking down internally far before you would ever know. Take care of your own house and your own people by honoring their trust; it will pay you back in dividends.

It’s the people, stupid

Some closing thoughts.

Working with excellent people and companies up close makes you realize just how large the delta is between good and great. Early in your career, the most important thing you can do is find excellence as quickly as you can and surround yourself with it.

This advice is important because it’s often misunderstood. Many young people feel that joining an elite company is primarily about the brand equity it affords. It’s nice to be associated with greatness by proxy, but that’s not the point. The value is in the exposure to greatness, for the purpose of setting your bar and developing your own skills. Good doesn’t even know what great looks like. Find great people and they will guide you.

Now back to work. Onwards!

Thanks to the wonderful friends who helped me get this post out and have supported me every step of the way.

Today marks six months since joining Rostra, so I thought I’d share six of the biggest lessons I’ve learned so far. They apply to comms (naturally), but I’ve found they also make for good lessons about people, companies, and life:

1. Wow, everything’s computer. If you’re reading this, you already know it’s quite literally never been easier to build something. The corollary of this is that it’s never been harder to get people to care. For me, the starkest example of this has been in speaking with reporters — as funding rounds continue to balloon in size, startup reporters likely won’t blink at a story unless the funding number is in the nine-figure range (or more). The overload of content and news makes for a tougher comms environment, but it’s a good forcing function to hone the message that actually gets people to pay attention. This is typically some interesting thesis about what’s happening in the world and where it’s headed. A helpful test is: let’s say your company didn’t exist — what’s something you could say that would make your target audience feel understood?

2. Keep the main thing the main thing. For Rostra and our clients, that means: comms goals = business goals. Lulu’s formula for a disciplined comms strategy that avoids wasted motion always begins with the strategic objectives: typically sales, recruiting, fundraising, or a stack-ranked combination of the three. The first step is identifying your goal and being clear about what you hope the outcome will be. The second step is figuring out what actions need to be taken, by whom, to achieve that goal. The third step is to crystallize what those people need to believe in order to take that action. From there, you have enough information to shape the message they need to hear, and the question then becomes how to make it personal, timely, and urgent enough that they stop what they’re doing to listen. Like many great things in life, this framework is very simple, although that doesn’t mean it’s easy.1 It’s actually hard! But sticking to a principled strategy like this one helps.

3. The enemy’s gate is down. Or, for Silicon Valley folk: you need to be updating your priors. In Ender’s Game, a group of elite young cadets are recruited for military training to learn how to fight against aliens. In one of their simulated wargames, the cadets are put into an enclosed zero-gravity space to battle against one another. Competing in zero gravity means that when the teams enter the space, they bring their orientation from the hallway outside and apply the arbitrary concepts of up, down, and across to the new space. Most of the cadets don’t even realize their disorientation — they just assume that the way things were outside is the way things are in the battle area. Ender, the book’s protagonist, was able to reframe the idea that the enemy’s gate was down, changing the nature of how the wargame was conducted. For comms, or for anything really, what worked before may not necessarily work now. The world is changing too quickly to rely on outdated playbooks. The best advice I can give you here is to stay in the game and adjust accordingly.

4. What you’re not is as important as what you are. Three great examples of this are the recent “Don’t Work At Anduril” campaign, Oslo’s “Is it even a city?” anti-tourism tourism ad, and this gem from Lulu on who shouldn’t go work at Substack. This is great advice for both recruiting and life. Knowing what you won’t tolerate clarifies what you will. It also acts as a beacon for the right people who should join you. Believe in something!

5. Build something people want (to be a part of). Companies achieve cult status through a mix of tribalism, goodwill, and status signaling. Seeing the Ramp ad during the Super Bowl was a win for chronically online tech people everywhere, whether or not they work at Ramp. Corporate cards are actually boring (spoiler!), but Ramp is a generational company and its employees ship fast, so posting about Ramp helps align your own brand with that ambition and speed. Talking about how much you love Anduril or Palantir suggests you’re actually based now (no really, you’re not woke anymore, contrary to your tweets from the previous zeitgeist). When a company has a strong mission, people want to contribute, even if it’s from the outside.

6. Speed is the moat. One of the many reasons I feel so lucky to be at Rostra is because I get a clear picture into how some of the best companies in the world build and operate. The biggest constant among them is that they just move faster than everyone else. They ship faster, fail faster, and iterate faster. The difference is palpable. If you think you’re not moving fast enough, you’re probably right.

Onwards to the next six!

Gaby

I am thrilled to share that I am joining Rostra, where I’ll be working alongside Lulu Meservey to help founders go direct.

“Learning to tell a story is critically important because that’s how the money works. The money flows as a function of the stories.” — Don Valentine

I’ve spent my career looking for ways to find and tell stories, beginning at early-stage fund Chapter One, then at multi-stage firm Bessemer Venture Partners, and most recently at TCG, where I joined a brand new team to help build out the firm’s first early-stage crypto practice. Working closely with founders in these roles reinforced my belief that the most important skill for anyone building something meaningful is the ability to tell their story.

This is a belief I’ve carried with me throughout my entire life. Growing up, I was selectively mute for five years, meaning that aside from my parents and two brothers, I avoided conversation with everyone around me. My world was lonely and small, so I turned to stories — reading, writing, and hanging out on the Internet to find company. Of course, I’ve grown up since then (and I certainly talk enough now to make up for my lost time), but my passion for telling stories never went away. In many ways, it informed my decision to put my life online in recent years, broadcasting much of my professional life and sharing perspectives on technology, crypto, and digital culture along the way. Rostra is now the second job I’ve gotten through Twitter. This is not a coincidence. Going direct helped me finally understand why so many people have called the Internet the great equalizer.

“If you can communicate the product, you can make money off the product. ‘Cause look at Gaga; she’s the creative director of Polaroid. I like some of the Gaga songs! What the f**k does she know about cameras?” — Kanye West

Everyone knows storytelling is important, but the lack of investment by founders into narrative building is surprising. When asked, most founders would say their top priorities are attracting talent and crafting a compelling story (critical for fundraising, hiring, and selling), but those functions are often relegated to HR and comms teams, or external publicists entirely. A founder would never outsource their product. Why outsource the story? Importantly, the founders who understand this know that they aren’t just building companies. They’re building movements. Don’t just build something people want; build something people want to be a part of.

Today, telling your story and owning your narrative is more important than ever. We’re at an existential crossroads for digital trust. Faith in legacy media and journalism is at an all-time low, especially in the world of tech. Founders have no choice but to tell their own story, because The Old does not like The New. Progress often threatens the establishment’s very existence. But the establishment loses its power when we talk to each other. This is the challenge, and this is the opportunity. We need to become the narrators of our own stories — not just telling the world who we are, but inviting the world to join us. This, to me, is the work worth pursuing.

Rostra is ushering in a new era for how founders tell their stories. Lulu comes from Activision Blizzard, where she led corporate affairs and communications, and before that served as VP of Communications at Substack. There, she met Sergey, Rostra’s co-founder and CTO. Neither Lulu nor Sergey come from a traditional comms background, which (I think) is what makes this all work. Both are scrappy, strategic, collaborative, optimistic, and kind — qualities I admire and want to nurture as I grow in my own career. 

I’m excited to continue storytelling, the thing I love most, now with the force multiplier of being a part of Rostra. It’s an honor to join the individuals who I believe are doing this work best, and who still are only just getting started. 

This is my first week at Rostra, and the first page of the next chapter in my own story. I am beyond grateful for the opportunity and thrilled for the adventure that awaits. I’ll continue to be based in New York City — please reach out! My new email is gaby@rostra.co.

“But crypto has no use cases!!!” 

There are use cases, you probably just aren’t paying attention to them. Many people expect progress to look a certain way, perfectly 1) in line with exactly what they expect or 2) parallel to how other industries have developed over time. For every industry, progress looks different — especially when an entirely new asset class is created from scratch. Within our own bubble, it’s easy to get cynical about what feels like industry stagnation. This isn’t true though, and below we’ll attempt to provide a whitepill on the state of crypto today, and how it’s only getting better. 

Crypto already has PMF, if you know where to look

To zoom out, over 66% of crypto users live in the developing world, and lower middle income countries have continued to show sustained demand (India, China, Brazil, and Vietnam lead the way in terms of crypto adoption as of March 2024). The United States is up there too, but Americans don’t necessarily need to use crypto to avoid inflation and get access to a stable currency other than their country’s native one. On the flipside, for developing countries, crypto is a necessity now: it’s a mechanism to protect them from their own (often broken) government and financial system. In Latin America, for instance, it’s very common for people to get their paycheck and “immediately put it into USDT or USDC.” And more than a third of Latin Americans have made an everyday purchase using stablecoins, signaling that companies are beginning to accept crypto, too. Globally, USDT on Tron is particularly strong, with ~$60B in circulation and ~44mm unique addresses holding. In short, global access to the US dollar has turned out to be a killer use case for crypto. 

“If people are looking in and only seeing the monkey gifs, that’s not crypto’s fault.” – Scott Alexander, Why I'm Less Than Infinitely Hostile To Cryptocurrency

Crypto as a competitive edge

In the aforementioned examples, crypto as a technology is the product. But there’s also an entire ecosystem of applications and use cases where crypto is simply the rails, enabling a better user experience than what might have existed before. One such breakout application is Polymarket, the world’s largest prediction market. Polymarket is uniquely enabled by the crypto infrastructure on which it is built. There are many obvious and non-obvious reasons crypto is a competitive advantage for an application like this: 

• Global accessibility. It’s a huge liquidity — and accuracy — problem if the market isn’t global.

• Chargeback risk. How can people bet $100k with a credit card? If you lose the bet, would you just charge it back? This risk is massive for non-crypto betting sites, which is why they’ve historically charged exorbitant fees. Polymarket has zero fees at the moment.

• Complex coordination. For prediction markets that operate cross-border sans crypto, there’s a massive coordination challenge between banks, regulatory jurisdictions, and foreign exchange service providers. In addition to imposing extra costs on the users, this makes these types of prediction market platforms slow, painful, and difficult to grow.

Polymarket is crypto’s poster child because it’s a strong and nascent example of how crypto can unlock use cases that just didn’t work at scale before. Polymarket largely 1) has been faster than traditional news sources and 2) is moving towards a new form of media altogether. This new form of media serves as a source of truth, a peer-to-peer social platform, and engagement mechanism that incentivizes correctness (or at least as close as you can be to correct, given the information available). 

We can even see Polymarket embeddings that update in real time right here on Substack (Exhibit A):

These small wins accumulate and slowly bring crypto more and more into the mainstream. 

A final note on Polymarket is how long the team has been working on the same vision. Their volumes were low and flat for nearly five years while they relentlessly kept at it — and even when the company nearly died from a $1.4mm penalty charge from the CFTC, they didn’t waver. Crypto’s always had an inherent bias towards the Current Thing™ but people often don’t realize how much time (and work) go into the ultimate “overnight” successes. 

Another company reaching far beyond crypto natives is Pudgy Penguins, whose products are now sold in Target, Walmart, and Walgreens around the United States (with over a million toys sold so far). They’re using their distribution as a way to onboard the masses to crypto; rather than a “build it and they will come” approach, Pudgy is aggressively shipping for their existing user base. Specifically, they’re building out an easy-to-use Layer 2, a game with blockchain-based elements, and even a show — all centered around their lovable brand (which started as just an NFT collection). It’s worth noting that Pudgy worked first to own their own distribution before building lower-level infrastructure into their stack. To date, most other L2s have done the opposite: build the tech and then attempt to bootstrap their community and entice applications to build within their ecosystem.

Pudgy has come up with creative ways to onboard users: for instance, each physical Pudgy toy comes with a QR code that can be redeemed in the Pudgy World game (Webkinz style). By gently introducing users to crypto — and making sure they have fun along the way — they’re more likely to 1) stay engaged and 2) potentially explore crypto more deeply. 

Bridging the gap for apps

One company powering a number of projects in the consumer app space with a critical piece of infrastructure is Bridge. They’re working on stablecoin APIs, specifically issuance and orchestration — a company-sized problem that projects had to own in-house before Bridge modularized it. Bridge has shown that doing one (important) thing well is a solid route to take in crypto, and they’ve brought an impressive list of customers on board because of it. What seems like a simple API is actually quite complex on the backend: Bridge handles all of the KYC and compliance on their side, while businesses just need to integrate with them to instantly convert between fiat and stables (or different forms of stables altogether). Even though stablecoins are a core use case in crypto, it’s been difficult to find solutions that on-and-off-ramp quickly and compliantly. Plus, there are many stablecoins out there and each platform often favors one. Bridge solves this in a flexible and easy-to-use way. 

YOU get a wallet! YOU get a wallet!

A common complaint in crypto (especially among new entrants) is wallets — which one to choose, how to pick one that connects with the most dapps, and if there are alternatives. A number of providers — Dynamic, Privy, Capsule, and Coinbase WaaS, to name a few — are fixing this problem for both crypto applications and their users by allowing individuals to move onchain without needed to jump through the hoops of downloading a third party wallet application or custodying a seed phrase. Constantly fixing integrations, managing updates, and adding new wallets when they launch (to make sure TAM isn’t limited) is a problem that consumes critical engineering resources on the company side. On the user side, the pain is obvious: without these embedded wallets, a user may not have a supported wallet (or, if they’re new to crypto, they may not have a wallet at all). Streamlining the crypto onboarding flow for new users is a crucial part of enabling mass adoption. These companies — many founded just within the last few years — are all playing a key role. 

Embracing unfamiliarity

All this to say, we still have work to do as an industry — but that doesn’t diminish what we’ve achieved so far. Ultimately, if you believe the financial system should be fast, global, low-fee, accessible, and in service of the people, crypto is the only end state. 

As a reminder, every new category has gone through growing pains — or often outright opposition — as it matured. When the printing press was originally introduced, monks and religious authorities opposed it because it lessened their control over information. Printing was even outright banned by Islamic authorities. One Swiss scholar, Conrad Gessner, “demanded that those in power in European countries enforce a law regulating the sales and distribution of books. He felt ordinary people should not have access to so many books.” In the late fifteenth century, Italian writer Filippo di Strata wrote, “The pen is a virgin, but the printing press is a whore.”

If the printing press is a whore, then I’m not sure the public’s description of crypto would be fit to print. But we’ll gladly take the blow in honor of progress. To be okay with unfamiliarity is to know that new technologies often look “weird” at the start.

We also acknowledge that the vast majority of experiments in crypto probably won’t pan out. But if you’re still making that argument, then you fundamentally misunderstand how breakout technologies evolve. This is not new. The maturation of the Internet required us to also say goodbye to in-house server farms, web rings, and Sony’s AIBO robot dog. This is a natural and healthy evolution as people experiment with new technology. The “power law” of successful products is quite literally what investors underwrite when entering these spaces. 

Infrastructure makes way for apps

Many of the breakout applications this cycle are enabled by new infrastructure that quite literally didn’t exist last cycle. Yes, there is seemingly more infrastructure than applications, but applications can’t really exist — or scale — without robust underlying frameworks. And because much of this is finally ready, innovation on the app side is accelerating. 

Joel Monegro noted famously in 2016 the concept of “fat protocols,” where in blockchain networks, most value accrued to the protocol rather than the application layer:

The modularization of the protocol layer, in our opinions, has compressed the share of “protocol layer” value capture in order to leave more wiggle room for apps. This way, apps are able to take modular components of the protocol layer, mix-and-match to their needs, and ultimately generate a better experience for their users (and one that’s more profitable as well). Users are now essentially paying applications via frontends that are increasingly abstracting away the protocol layer. 

Interestingly, as a result of infrastructure modularization, many problems that Ethereum application developers face today often have less to do with tech and more to do with culture. For those builders, the ecosystem on which they choose to build is critical for their brand, community, and longevity. Sometimes, these apps become known as “the project building on [insert your favorite L2 here]” which can diminish the value of their own product and brand if the L2 doesn’t sustain. Whereas building on Solana is uniform in that everyone is by-default building of the same singular platform, Ethereum poses a critical question for developers: where should I build? Since most chain abstraction protocols aren’t ready, it’s also not really an option yet to “deploy everywhere” either. And when the ecosystem becomes more important than the application itself, it can create a parasitic relationship between the two, with the application and ecosystem both fighting for the same limited attention. 

It’s possible that what started this in the first place is the fact that Ethereum did effectively zero marketing, which forced the L2s to create their own brand and style. This credibly neutral approach allowed for a rich and diverse L2 ecosystem, but also of course led to fragmentation. Vitalik highlighted this in a recent post, likening L2s to cultural extensions of Ethereum itself: “for a subculture, a layer 2 is the ultimate playing field for action.” These subcultures may actually be the optimal breeding grounds for emerging applications: users are bought in, communities are tight-knit, and builders are prolific. Further, the culture of the underlying L2 can lend itself to its applications to strengthen and augment their cultures. And of course, from an infrastructure standpoint, many L2s on Ethereum are maturing such that many more applications are made possible to exist and scale. 

Closing thoughts

We’ve seen enough cycles at this point to know that infrastructure begets apps which beget infrastructure, and the vicious cycle continues. The emergent technologies we love to complain about are the very products enabling low-fee chains, better distribution, and higher quality UX, all ultimately driving adoption. We still have work to do, but it’s worth recognizing all we’ve been able to achieve in spite of the FTX et al collapses, regulatory headwinds, and extreme market volatility. Our industry is still small and early enough that the work we do should be positive-sum. It’s time to be authentically ambitious again. Like we said… good things take time.

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Thank you to Joey Krug and John Coogan for their thoughts and feedback on this piece.

In 2019, just over twelve miles off the coast of Phuket, Thailand, Chad and Nadia Elwartowski settled into their new home. 

Chad and Nadia are seasteaders, part of a niche, ambitious, and libertarian-flavored movement geared towards building floating cities. Because international waters aren’t under any state’s exclusive jurisdiction, seasteaders could theoretically establish new independent states, free from government interference. Chad and Nadia made history as the first to live out the seasteading ideal, hoping to prove that living autonomously could be a radically different and better way of life.

“They have a monopoly on land, but they don’t have a monopoly on sea.” — Chad Elwartowski

The appeal of seasteading is simple: if you don’t like it, you can leave. Floating houses provide physical, political, and ideological freedom. If a seasteader doesn’t like the way their community is developing, they can leave to join (or start) a new one. 

Many new categories start out this way, where members of an existing system choose to leave and build a new one instead of trying to change theirs from within. Not surprisingly, incumbents tend to neglect members who want to make big changes to the status quo — it goes against their very existence. As a result, these members are left with no choice but to leave and start something new. Lucky for them, the future is built by playing new games with new rules. If you aren’t paying attention, you’ll miss it.

Some examples are obvious in hindsight. 

Martin Luther’s initial attempt to reform the Catholic Church's practices through his Ninety-Five Theses in 1517 ended up resulting in his excommunication, which ultimately led to the founding of the Lutheran Church. In 1776, when American colonists were frustrated by high taxes and lack of representation in British Parliament, they didn’t just lobby for reform; they wrote the Declaration of Independence and founded a new country based on principles of democracy and self-governance. In 1994, when young entrepreneur Jeff Bezos wanted to sell books online, he didn’t seek the expertise or support of traditional book retailers. He started a new company in his Bellevue garage and called it Amazon. The new doesn’t necessarily go against the old. It just circumvents it.

One of my favorite recent examples of this is crypto. 

Bitcoin emerged in the wake of the 2008 financial crisis, which had exposed significant vulnerabilities in the architectures of the centralized banking system. Its promise of decentralization and financial sovereignty appealed to a growing base of individuals who had become disillusioned with the opacity of traditional finance. Many traditional investors and technologists dismissed crypto as a fad, a speculative bubble, or a tool for illicit transactions. While they were not paying attention, those who understood crypto’s potential continued to build. Slowly, and then all at once, this small-scale experiment evolved into a much larger community and ecosystem, aligned by shared beliefs and economic incentives. Bitcoin was the best performing asset of 2023. Ethereum averages over 1 million transactions per day. Following their approval in January of this year, it took only seven weeks for Bitcoin ETFs to reach inflows that took gold ETFs three years.

This growth is not just numerical. It represents a profound shift in the way people view and interact with money. Crypto networks offer a way to circumvent traditional financial intermediaries, giving individuals unprecedented control over their financial transactions and identity. It is a societal change first, a technological one second.

Crypto would have never survived if it were built within the traditional financial system, with entrenched interests fighting back to protect the status quo. It was born on the outside and thrived as a result. Emerging systems have no choice but to circumvent their incumbents, because The Old does not like The New. 

Chad and Nadia learned this the hard way — I didn’t tell you the end of the story! Only two months after they moved into their seastead, they found themselves trying to escape the Thai Navy, who deemed them in violation of the country’s sovereignty (a capital crime). They eventually fled to safety and settled in Panama. 

I’m not a seasteader, and I don’t know Chad or Nadia personally, but it seems to me that the attack on their floating pod highlights exactly why they went out to the middle of the ocean in the first place. As Chad wrote in a Facebook post during their escape: “We just wanted to be free. If just for one day.”

Chad and Nadia’s desire for freedom and autonomy is a common thread among many pioneering movements, including crypto. Despite being relatively young, the crypto industry has arguably made more progress in disrupting the financial system than mavericks in other, older industries have in challenging their status quo. But crypto represents a burgeoning trend worth paying attention to. Across many different categories, people who don’t feel served or seen by the existing systems are building new ones.

Take education, for example. Today, American student debt is over $1.7 trillion. Confidence in higher education has plummeted to record lows. Last year, Harvard was ranked the worst college for free speech. More than half of students from a third of American colleges earn less than high school graduates. The system feels uniquely broken.

But new institutions are emerging. The University of Austin, founded in 2021, is “committed to the fearless pursuit of truth.” Elon Musk’s new STEM-focused grade school (also in Austin) may start accepting students as soon as this summer. Startups like Synthesis, Minerva, Primer, and Sora, along with public goods like MIT OpenCourseWare, Khan Academy, and Stanford Online, are working to bring these specialized experiences to students everywhere. With new tools coming to market every day (I’m thinking about the recent GPT-4o tutor demo, among others), you can imagine how incumbent systems might continue to be disintermediated.  

Replit CEO Amjad Masad, in response to a critical tweet about Mentava: “Of course we are building [a] parallel track for kids to learn, build, and earn. What—you thought you can capture the institutions and that we will just send our kids to be indoctrinated into your loser ideas & worldview? You haven’t even uncovered a fraction of what we are building.”

Self-directed healthcare is another category to pay attention to. The United States healthcare system is expensive and dysfunctional. We spend more on healthcare than any other developed country, but objective measures of health quality are relatively low. In fact, the U.S. is actually below average for a number of metrics including life expectancy (the lowest among large, wealthy countries) and obesity rates (nearly twice the OECD average). Hospital services have only become more expensive, and yet it seems that everyone is getting sicker.

“A hospital is a place of filth, torture, and death, a sort of antechamber to the tomb.” — George Orwell, How the Poor Die (1946)

Extensive regulations and the monopolization of information by incumbents have prevented the healthcare industry from keeping pace with other technological advancements. Enter self-directed healthcare — the movement towards personal wellness, encompassing longevity research, functional medicine, biohacking, and more. In many ways, self-directed healthcare does not aim to be the successor to traditional medicine. It isn’t going against the incumbent; it’s circumventing it. You don’t need healthcare committee approval to treat yourself. New entrants like Superpower, a personalized digital longevity clinic, Prophetic, a non-invasive neural device for lucid dreaming, and Nucleus, a consumer genetic testing company, are a few examples.

The most literal example of people exiting an incumbent system is in physical space — people voting with their feet. Just like Chad and Nadia did with their seastead, more and more individuals are leaving existing communities and joining (or building) new ones. Census Bureau data shows that between 2022 and 2023, red states like Florida and Texas saw the highest net domestic immigration, while blue states like California and New York saw the highest net domestic emigration. 

Anyone who lives in the United States can imagine why this might be. People like warm weather and low taxes. COVID-19 accelerated this trend, when it became possible (and acceptable) to work from anywhere.

Again and again, we are reminded that technology gives individuals choice and control. The Old does not like The New. But now, The New can exit. And they are! 

They’re also exiting to Miami, which is home to a growing number of startups (and acts like a startup in its own right). They’re exiting to Dubai, where attractive policies draw immigration and investment. And they’re exiting to entirely new communities: Prospera, Praxis, Cabin, Culdesac, Vitalia, Zuzalu, Pursuit — and yes, seasteads. Companies like Nomad List and CitizenX make these migrations easier than ever before.

“When experts are wrong, it’s often because they’re experts on an earlier version of the world.” — Paul Graham

These unfolding narratives are being driven by both technology and talent. Choosing good quests starts with choosing good leaders first. What this means is that alongside the creation of entirely new categories, there will be new credentialing systems to underpin them, too. Incumbents will lose the ability to understand and identify talent, further separating The Old from The New. This is a good thing and a necessary evolution.

The common theme across all of this is that new innovation starts to take place when the incumbent is splitting at the seams. Importantly, though, the incumbent doesn’t usually collapse from a direct attack. Instead, they’re bypassed by new ideas that simply start without them. 

We could do a better job of welcoming and celebrating this. Building towards a culture of progress matters. The way we speak about the world is the way we create it. 

So let’s be in defense of the new. Let’s not just watch the future unfold. Let’s help shape it, too.

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Thank you to Anu Atluru, Mike Dempsey, Kevin Gee, Erik Torenberg, Eoghan McCabe, Mene Mazarakis, and Rune Kvist for reviewing.

The materials presented on Gaby Goldberg's newsletter are my opinions only and are provided for informational purposes and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, strategy, or investment product. Any analysis or discussion of investments, sectors or the market generally are based on current information, including from public sources, that I consider reliable, but I do not represent that any research or the information provided is accurate or complete, and it should not be relied on as such. My views and opinions expressed in any website content are current at the time of publication and are subject to change.

Fragmentation often appears when new ecosystems are created, requiring users to move funds in order to have tokens accessible and usable on the new chain. This creates a point of friction for users moving over to the new ecosystem or specific application. If they don’t have the right tokens on the right chain, they typically need to leave the user flow and bridge their funds on a third-party application before returning. This is a major dropoff point in many customer journeys. Similarly, there’s fragmentation across ecosystems from a data perspective: even if a user is interacting with the same wallet across various ecosystems, it’s often difficult to see all of their transactions and user behavior in one place. 

Scaling is another issue that builders in crypto are well aware of. Just last week, two L3s experienced over two days of downtime, caused by a large increase in on-chain activity as well as a failure on the chain’s data availability layer to process the larger batch sizes (increased as an experiment to reduce frequency of batch posting to the L2 and cut costs for the L3 chains). 

These problems are frustrating for ecosystems, applications, and users alike. But I like to call them “good problems.”

Increased fragmentation means developers are building new ecosystems and applications for consumers to use. Scaling issues mean that more and more people are engaging with experiences onchain. The infrastructure isn’t evolving quickly enough to keep pace with the rapidly expanding developer ecosystems and consumer use cases. These are good problems. They reinforce that we’re trending in the right direction, building products on the foundation of what consumers want. 

Many of my favorite teams are tackling these “good problems.” Companies like Decent and Relay work to solve ecosystem fragmentation by enabling instant cross-chain execution, allowing users to transact with the existing tokens in their wallet. Once Upon addresses data fragmentation for the Superchain by covering and contextualizing transaction data across L2s and L3s, all in one view. And a number of companies are focused on solving ecosystem scaling issues, with teams like MegaETH uniquely focused on enabling real-world use cases that require real-time transactions.

Things can break when you’re building at the edge. I am not arguing that these problems don’t exist; rather, I’m reminding us that they are good problems to have. They are signs of more developers building applications and more consumers using them. The hurdles along the way are part of the journey and an affirmation that we’re moving in the right direction. Let’s continue to embrace and solve good problems.

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The materials presented on Gaby Goldberg's newsletter are my opinions only and are provided for informational purposes and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, strategy, or investment product. Any analysis or discussion of investments, sectors or the market generally are based on current information, including from public sources, that I consider reliable, but I do not represent that any research or the information provided is accurate or complete, and it should not be relied on as such. My views and opinions expressed in any website content are current at the time of publication and are subject to change.

Cover image: Catalan Landscape by Joan Miro

One interesting phenomenon I’ve noticed in these chat rooms is that women have started selling their clothes directly within the chat, as opposed to using native social commerce marketplace apps like Poshmark and Depop. Because these newsletters (read: niche communities) are so good at cultivating trust, purchase conversion and propensity to spend is much higher. I’ve experienced this firsthand: an old dress of mine that would have taken me days or weeks to sell on Poshmark or Depop ended up selling within minutes to a fellow subscriber. She was able to direct message me through the Substack app and we exchanged payment details from there.

To me, the business use case for integrating native payments is obvious, and stablecoins seem to be the best way to go about doing it. Instead of collecting every writer’s (and reader’s!) bank details via Stripe, Substack could automatically create a wallet for them upon account creation (companies like Capsule and Privy make this easy). If somebody decided they wanted to make a purchase through Substack chats, they could load their wallet via debit card (or deposit directly from their bank account) and, with the help of something like Bridge, send USDC to an escrow contract, which would hold the payment until FedEx or USPS could confirm the shipment was on its way. The payment would then be released to the seller, who could either hold the balance in her wallet or offramp it for cash.

Where this gets interesting is the incentives and royalties for the most important party in the transaction: the moderator of the chat. I can imagine this playing out where every time a sale is made, the chat owner is programmatically paid out a small royalty for facilitating the sale. Additionally, Substack could command a small fee for making this process easier and safer for its users. With stablecoin payments integrated into the product experience, the existing consumer behavior of buying and selling clothing becomes faster, cheaper, and more global for Substack users — and it provides an entirely new line of business for Substack itself. I can see this playing out across all niche communities on the web. This would be an exciting and compelling first step.

My friend 0xDesigner made a very cool visualization of this idea as part of his Design Everydays series, which you can view and mint here.

The materials presented on Gaby Goldberg's newsletter are my opinions only and are provided for informational purposes and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, strategy, or investment product. Any analysis or discussion of investments, sectors or the market generally are based on current information, including from public sources, that I consider reliable, but I do not represent that any research or the information provided is accurate or complete, and it should not be relied on as such. My views and opinions expressed in any website content are current at the time of publication and are subject to change.

We wrote about a version of this in our 2022 Year in Review letter:

“As crypto continues to evolve, tech increasingly becomes a commodity and liquidity becomes less of a moat for consumer businesses. We see this in the development of vertical NFT marketplaces and liquidity aggregators like Reservoir, FirstMate, Snag Solutions, and others. These marketplaces provide more flexibility and convenience than ever before — consumers no longer have to go searching across platforms for the best price, and NFT project creators can now spin up their own verticalized marketplaces while leveraging aggregated liquidity. Previously, NFT projects would spend huge amounts of upfront time and capital to build a beautiful mint site for primary sales, and would then immediately let go of their customers by allowing them to move to third-party marketplaces for secondaries. With better tooling, and with liquidity removed as a moat, these projects are increasingly working to own the vertical business with more and more of a focus on brand and user experience.”

We wrote about aggregated liquidity, but this notion of owning an integrated stack extends far beyond that. Coinbase has quickly become the canonical example of what is possible here, with a centralized exchange on top and a blockchain, wallet, stablecoin, and rapidly growing app ecosystem layered underneath. Many large companies in crypto are following suit. Uniswap launched its own wallet. Zora launched its own chain. Backpack launched its own exchange to complement its existing protocol, wallet, framework, and community. There are myriad examples of this, and likely even more to come.

There are a couple key reasons why this is compelling. Each new layer affords new monetization opportunities: value can be captured not just at the “app layer” or “protocol layer,” but instead at any point where a transaction takes place. Importantly, an integrated stack can also provide for a much cleaner consumer experience. The Base team put it well in their blog post: “You should be able to come onchain and barely notice.” Perhaps consider the corollary: any moment where a key UX touchpoint is forfeited to an outside provider is an opportunity for user churn. An integrated stack is often a better consumer experience — and better business, too.

What also excites me about this trend is the innovative tooling that underpins it. For example, companies like Capsule, Privy, Dynamic, and Coinbase WaaS help application developers create wallets for their users to onboard to crypto. Relay, Decent, Light, and Hyperlane unify liquidity across chains, enabling seamless swaps and transactions. When applications own the infrastructure layers underneath, they can be opinionated about what complexities are abstracted away. For consumers, convenience wins. Crypto is highly complex in both its technology and philosophy. We’re seeing collaborative energy, both in how we can create faster, more efficient services for millions of people to use, as well as in how we can leverage that infrastructure to create fluid products that fit within the expectations of great consumer experiences. I’m looking forward to seeing what new types of applications might emerge when developers own the entire consumer journey. Maybe this is just the beginning. 

Related reading:

Why Every Winning Onchain App Will Be Social by

The Hidden Costs of Modular Systems by Kyle Samani

Expected Value in Crypto & Building Infinite Blockspace by

TCG Crypto is an investor in Capsule. None of the information discussed herein is intended to be, or should be construed as financial advice, or an offer to sell or a solicitation of an offer to buy an interest in any security. The information set forth herein has been obtained or derived from sources believed by the author to be reliable and has been provided solely for informational purposes. Nevertheless, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness. Certain companies referenced herein are included by way of example and not companies in which TCG has invested to date nor companies in which TCG intends to invest.

Cover image: The Tower of Babel by Pieter Bruegel the Elder

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My entire lived experience on the Internet has been informed and mediated by Google, which was incorporated in September 1998 — less than a year before I was born. In 2023, Google generated over $307 billion in revenue, with $175 billion coming from Google Search (representing nearly 57% of its total revenues, and over 73% of its total advertising revenues). Google’s revenue growth has arguably come at the expense of its search quality. As Sergey Brin and Lawrence Page said themselves back in 1998: “Advertising income often provides an incentive to provide poor quality search results.” Of course, any user of Google has seen this play out. My former partner Talia Goldberg at Bessemer writes: “Results are riddled with SEO arbitrageurs, ads, and affiliates. It pushes users to the highest bidders. It prioritizes its own results over organic links and prioritizes SEO optimized sites over quality content. The quality and relevancy is declining.” 

Today, many of my Google searches are appended with the word reddit or substack — or I’m searching in a new place entirely, like on Twitter (usually for things regarding technology or business) or TikTok (for searches regarding travel, restaurants, fashion, etc.). This disaggregated method of search is the most convenient way for me to get closer to the kind of content I’m looking for, written by people I trust to create it. 

Trust is a powerful force. New technologies are transforming how information is packaged and delivered online. This is both inspiring and, candidly, a bit unsettling. The Internet used to be the creative medium. Now, it’s just the mode of delivery. We are force-fed content and it doesn’t quite feel like we have much choice in what we consume. As I wrote last year, I am curating my feed, but moreso, my feed is curating me.

“We are grappling with a revolution in how software works and computers work, and that’s gonna mess some stuff up.” — The Browser Company CEO Josh Miller, on The Vergecast

ChatGPT’s launch in late 2022 ignited somewhat of an arms race for web browsers to integrate AI-generated search results. In early 2023, Microsoft released a new, OpenAI-powered version of its Edge browser, while Google introduced Bard and new generative AI capabilities in Search. Smaller browsers like Brave followed suit, while others, like Neeva, dropped out of the race entirely.

As a pure consumer of these products, the release that moved me most was The Browser Company’s announcement of Act II, which I recommend you watch here (the next few paragraphs are a spoiler!):

The Browser Company is the buzzy new startup behind the Arc web browser. The Act II video marked the official release of their new iPhone app Arc Search, powered by a feature they call “Browse for Me.” Instead of displaying search results from Google or another engine, the feature searches the Internet for you, generating custom web pages tailored to your search queries.

The feature is pretty amazing, particularly for “objective” searches where you care more about the facts (e.g. Who won the Super Bowl this year?) and less about the source of the results. 

A lot of people love the feature. But others aren’t as unilaterally excited. If user experiences like “Browse for Me” were to become the norm, then we’d lose the journey of discovering content in the first place, one of the most viscerally human parts of the Internet. And as writes in Fast Company: “Why even bother making new websites if no one’s going to see them?” 

Algorithms are informational gatekeepers. AI search tools, in an effort to show us the most relevant content in the most efficient format, may actually make obsolete our ability to have an Internet that feels uniquely our own. “Surfing the web” very well may be a thing of the past. Already, my sources of information and trust online have splintered. I read about current events on Twitter. I listen to music on Spotify. I shop on Amazon. The browser is a navigation engine to reach these places, but the search experience itself is fragmented across these highly specialized platforms.

“Under algorithmic feeds, the popular becomes more popular, and the obscure becomes even less visible. Success or failure is accelerated.” — , Filterworld: How Algorithms Flattened Culture

In the 1947 book Dialectic of Enlightenment, the chapter The Culture Industry: Enlightenment as Mass Deception argues that culture has become an industry in its own right, promoting a false consciousness among the masses. The “culture industry” makes individuals believe they are consuming personalized and meaningful content when, in reality, they’re being fed the same repetitive themes designed to reinforce the status quo. People tend to want things because other people want them. Human behavior is not an autonomous process but a collective one — this is how we decide what we care about. Sound familiar? Barbieheimer, Taylor Swift and Travis Kelce, “Your Favorite Coffeehouse” Spotify playlist, Stanley Cups… Isn’t it all so exhausting?

Now feels like a good time to bring up a conspiracy theory I’ve been thinking about. A few years ago, a user by the name of IlluminatiPirate published Dead Internet Theory: Most of the Internet is Fake on the online forum Agora Road’s Macintosh Cafe.1 The theory proposes that the majority of the content with which we engage online is algorithmically generated by bots, all in an effort to control what we believe. I feel obligated to warn you that the post is a bit out there, like all great conspiracy theories are. For the purposes of this piece (and your general entertainment) I recommend you give it a read nonetheless.

“There’s a pretty powerful impulse in us which, when we hear something huge that could change our view of everything, rejects it to protect ourselves. No-one wants to have their whole world-view, which they’ve built a life upon, blown apart.” — IlluminatiPirate

Perhaps the actual mechanics of the theory are overblown, but to me, the sentiment holds at least somewhat true (and, for what it’s worth, the majority of web traffic does likely come from bots). A poignant example is r/SubSimulatorGPT2, a 2019 subreddit where all posts are automatically generated using a fine-tuned version of OpenAI’s GPT-2. It’s a fascinating reflection — evoking an uncanny valley feeling — of the Internet today (and this is a language model that’s four years out of date!). If these posts are fake, then what’s possibly real? (Related: Alicia Keys’ sour note during the Super Bowl halftime show getting wiped off the Internet; this AI-powered LinkedIn reply guy)

All of this comes back to “Browse for Me” and what starts to happen when we surrender control of where and how we get our information. The fact that the Dead Internet Theory was even popularized on an ‘80s Vaporwave community forum (the subtitle reads “Enjoy the best kept secret of the Internet!”) is evidence of this. The best parts of the Internet — the best parts of it for you, whatever that might mean to you — are usually hard to find. That’s precisely what makes them so special.

One analogy I heard and have come to appreciate around this dialogue is that of driving a car. For a majority of car rides — maybe you’re commuting to work, driving to the airport, or running errands — a self-driving car might be your first choice. But for a select number of car rides — maybe you’re on vacation, or with friends on a road trip — you absolutely want to be in the driver’s seat. Even better, you want the top down, your favorite music blaring. Any element of “abstracting away” the driving experience would be counterintuitive. The journey itself, not the destination, is the product.

So, if the Internet has effectively become cable TV, what is the new information frontier? This, I believe, is the question worth exploring. “Browse for Me” as a concept is quite powerful for “objective,” fact-based search, but it doesn’t solve how we might leverage new technologies for everything else we search online, particularly around user-generated content and any media native to a digital format. To start, we have to think about the media we consume — and, importantly, what’s in it for the people generating the information in the first place. 

I do think it may finally be time to see a more social version of search. I tweeted about this concept back in 2021, subsequently prompting much of this thinking. For example, I like to trade phones with my friends or siblings to “step into” the algorithmic feeds they see on different sites. I learn a lot about my friends by seeing what their TikTok or Pinterest feeds look like. It’d be powerful to experience this phenomenon from my own device. Similarly, “annotating the web” is another interesting idea along this vein — imagine stumbling across a niche site and seeing a record of which friends may have been there before you. Like digital geocaching! Along with Arc, companies and projects like Moonbounce, Beam, Silk, and Browser.html are building towards this future.

Returning to the concept of trust, I also anticipate we’ll see a rise in vertical, use case-specific search. We are seeing this already with Elicit and Consensus for research and K Health for healthcare. Some smaller projects are equally intriguing: one of my favorite examples is YC Vibe Check, a semantic search engine over every YC company since the program’s inception.

For entertainment and other areas of “subjective” search, human-centered curation on what is important will still matter. It’s likely that, in the future, it will even come at a premium (see Daisy Alioto of Dirt on luxury media; skip to ~17:00). 

Across these categories, the bottom line is that there’s no such thing as an “objective” AI or algorithm. Bias exists at every layer. Models will be unbundled the same way traditional media has been splintered apart, and the human element — from pretraining and labeling to ongoing community moderation (see Wikipedia, Reddit) and maintenance incentives (maybe it’s finally time for a token-curated registries comeback?) — won’t be abstracted away. 

The Internet can be a weird place, but it’s our home. We live here now. The future is unknown and that’s precisely what makes it all so exciting. I trust we’ll find a way to take care of it.

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Thank you to Kiran Cherukuri and Tony Lashley for their thoughts on this piece.

The materials presented on Gaby Goldberg's newsletter are my opinions only and are provided for informational purposes and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, strategy, or investment product. Any analysis or discussion of investments, sectors or the market generally are based on current information, including from public sources, that I consider reliable, but I do not represent that any research or the information provided is accurate or complete, and it should not be relied on as such. My views and opinions expressed in any website content are current at the time of publication and are subject to change.

Of course, it was, and it reinforced my belief that there is immense value in the act of sticking to something you care about. Committing to things is important. Optionality is cheap. Many of the experiences that shaped me most this year required at least some form of sacrifice. 

What focus means is saying no to something that, with every bone in your body, you think is a phenomenal idea, and you wake up thinking about it, but you say no to it because you are focusing on something else. — Jony Ive, on the lessons he learned from Steve Jobs

I remember when I first started training for the marathon, everything would hurt. My shins would ache, my chest would feel tight, and my heart rate would be through the roof. Forget listening to a podcast or being able to hold a conversation with a friend. At the beginning, every step was a challenge. I didn’t understand why people did this for fun. Of course, once you start to run consistently, your body learns how to adjust — things begin to feel steady, maybe even effortless at times — and the experience of runner’s high keeps you coming back for more.

But running is an interesting endeavor in that it never really gets any easier. Sometimes you go out and every step is hard. If you’re running for a long time, your body might feel like it’s actively fighting against you. Maybe it’s raining, or it’s so hot out that you can’t hit your normal paces. Maybe you’re doing everything right physically, but mentally you can’t get into a groove.

This is why I run. It’s not easy. I don’t think it’s supposed to be. Running is an intentional practice that you actively choose over and over, even — especially — when you might not want to. My friend Brooke once described running to me as a healthy ego death. No mileage is promised to you, and so much of the sport is out of your control. You can’t get too comfortable or confident. This is a positive trait that I have been grateful to find reflected in other areas of my life.

Anyway, back to my initial point. I knew the marathon would be one of the happiest days of my life. What I didn’t expect was the overwhelming feeling of grief that washed over me at the starting line. The race hadn’t even started, and yet I couldn’t shake this feeling of sadness that it was all about to be over. 

Reflecting on this feeling, I am reminded of my late Uncle Murray, who passed away at age 100 in 2021. Murray lived an incredibly full life. His father (my dad’s grandfather) immigrated to New Bedford, Massachusetts from Lithuania a few years before Murray’s birth in 1921. As a kid, Murray worked for his father, who was a plumber. His job was to deliver cast iron bathtubs — several hundred pounds — to people’s apartments, strapping them onto his back and climbing up the stairs. Murray had no money for college, so after high school he joined the Merchant Marine Academy, eventually rising to be the captain of his own ship (the youngest person to hold the position at the time) and serving as Chief Engineer on tanker ships supplying troops during World War II. 

Upon his return to Massachusetts, Murray spent a year working for his father’s plumbing business before opening his own, expanding into commercial plumbing. When he went to bid on his first contract, he didn’t have any money, so he went to the First National Bank of New Bedford and asked for a loan. In theory, Murray should have never received the loan, as he had no collateral to offer — but because the president of the bank had done business with Murray’s father in the past, he chose to give him the loan anyway. This loyalty and vote of confidence was the catalyst to Murray eventually establishing himself as one of the city’s preeminent industrial plumbing contractors.

Over the next decade or so, as the business continued to grow, Murray and his friends began buying up shares of the First National Bank of New Bedford until they owned 51%, at which point they were appointed Directors to the bank’s board. At their first board meeting, the president of the bank asked Murray if he was getting fired. Murray reminded him that he gave him a loan when he was just starting his business, when he had no collateral to provide. He promised the president, “You have this job until the day you are ready to retire.” 

These are just a couple examples of Murray’s wildly entertaining and inspiring stories. He shared them with our family, to our great delight, throughout his old age, and I was lucky to hear them through my dad as well as from Murray directly, up until our final visit when we celebrated his 100th birthday together. I share them now because they provide important context to some of the final words Murray shared with my dad on their last phone call:

“Why is life so short?”

Murray lived to be 100 years old and yet he couldn’t believe it was already over. At risk of trivializing his words, I couldn’t help but think of them while running my race. I had spent the majority of my months of training in service of simply reaching the finish. In doing so, I failed to realize that the most impactful part of the marathon — and what I would miss most — was the training itself.

It is a commonly shared sentiment that running is like life. In What I Talk About When I Talk About Running, Haruki Murakami writes:

“If you’re going to while away the years, it’s far better to live them with clear goals and fully alive than in a fog, and I believe running helps you do that. Exerting yourself to the fullest within your individual limits: that’s the essence of running, and a metaphor for life — and for me, for writing as well. I believe many runners would agree.”

I also revisit this piece often from Shreyas Hariharan:

“It takes many decades to do something meaningful and running simulates those decades… Repeating something seemingly mundane for many years turns it into something special and transcendent.”

In a generation addicted to optionality, training for a marathon taught me the importance of commitment. But it wasn’t until I actually ran the damn thing that I learned the value in enjoying the journey, too. When the only constant is change, working in an industry like technology can be difficult (crypto, exponentially so). The highs are incredibly high and the lows are painfully low. Sometimes you forget why you started, or you try to numb the present in pursuit of reaching the future. We make progress when we set ambitious goals and stick to them, and we should continue to do so. But we shouldn’t lose sight of the fact that there is beauty in the practice of the thing. Regardless of what it is you care about, I hope you stick to it in 2024. Importantly, I hope you enjoy it. 

The materials presented on Gaby Goldberg's newsletter are my opinions only and are provided for informational purposes and should not be construed as investment advice. It is not a recommendation of, or an offer to sell or solicitation of an offer to buy, any particular security, strategy, or investment product. Any analysis or discussion of investments, sectors or the market generally are based on current information, including from public sources, that I consider reliable, but I do not represent that any research or the information provided is accurate or complete, and it should not be relied on as such. My views and opinions expressed in any website content are current at the time of publication and are subject to change.

Over the last decade, the concept of borderless payments was frequently hailed as crypto’s ultimate killer use case. Designed to operate globally from the start, crypto payments could make moving money faster, cheaper, and future-proofed against hyperinflation and corrupt governments. But for an idea arguably as old as the industry itself, we still have yet to see platforms solving this problem for consumers at scale. 

Clearly, it’s not a question of demand. The traditional cross-border payments industry reached $190 trillion in 2023. In crypto specifically, lower middle income (LMI) countries show more grassroots crypto adoption than their counterparts, with Central and South Asia leading the way. Growth of retail crypto usage in Brazil has outpaced that of traditional equities markets. And Argentines largely prefer the physical US dollar as a form of savings – the peso lost 40% of its value in 2019. "Historically, things didn’t go well for those who tried to save in pesos," said Matías Rajnerman, chief economist at consultancy firm Ecolatina. "Those who did so in dollars, did well.”

“You can walk up to any Argentinian person and ask how many pesos to a dollar, and they’ll know. As crypto adoption has grown, lots of people here will now get their paycheck and immediately put it into USDT or USDC.” —Alfonso Martel Seward, Head of Compliance & AML at Lemon

Solutions do exist, but they are small, geo-specific and fragmented. Individual markets are often served by local players (see LoopiPay in Brazil, Lemon and Buenbit in Argentina, Jambo and Yellow Card in Africa), but are limited by the regulatory confines — and subsequent liquidity — of that region. As a result, a consumer’s ability to send money cross-border is dictated by their local platform’s market coverage. This is largely why we have yet to see a dominant player emerge at scale: differences in regulation across regions make it difficult to implement offramping infrastructure that integrates across local exchanges — and there are hundreds (if not thousands!) of different regulatory environments with which companies need to comply to operate globally.

Reading these facts, it feels like the future for cross-border payments could take one of three paths: 

1. The market largely stays the way it is now, resigned to a network of small (geo-specific), commoditized businesses that are able to serve local customers somewhat sufficiently, but incompletely.

2. A regional incumbent solves the regulatory bottleneck and grows market share in a meaningful way to serve a global customer base. 

3. A new entrant successfully disrupts the category and creatively solves user acquisition and regulatory challenges to achieve global distribution.

We’re excited about development across any of these axes. Innovation gives consumers choice and control as competitors are pushed to build better products and drive prices down. This type of competition means progress. Regulatory headwinds still exist, but history has shown that the products that serve consumers best have the ability to shape regulation in their favor (see: Uber, DoorDash, Airbnb). Some of the biggest markets were built out of regulatory gray areas. This, in large part, is why we remain excited. 

We’re also excited because, although borderless payments is far from a new concept, the facts surrounding its feasibility have changed as the industry has evolved. Blockchains have become faster and cheaper. Self-custody wallets have been made more user-friendly by way of account abstraction, multi-party computation, and social recovery. Stablecoin APIs have matured and their use cases have expanded. This new set of tools have provided an increasingly compelling foundation on which companies in this category can be built. Perhaps what once was old is new again.

Faster, cheaper infrastructure

Research breakthroughs and timing have played a large role in why the borderless payments category has no global winner. Only recently have blockchains reached levels of speed that can compete with (or outpace) traditional payments. Similarly, new standards within private key and account management have emerged to be more consumer-friendly, and on/off-ramp toolkits help to abstract the transition between fiat and crypto entirely. Across the infrastructure stack, we’re observing creative products emerge to simplify the cross-border flow of funds:

• Wallet-as-a-service (WaaS) providers are leveraging innovative cryptographic frameworks — like Capsule with multi-party computation (MPC) and Privy with Shamir secret sharing (SSS) — to help applications onboard new-to-crypto users without need for seed phrases, while still remaining non-custodial.

• Fragmentation across the onramp (fiat-to-crypto) landscape is being solved by plug-and-play aggregator products like Onramper, which enables developers to efficiently route transactions across 17 different onramps, 190+ countries, and 180+ local payment methods.

• Companies like Ramp Network act as full-stack crypto toolkits for developers, with built-in compliance, support for major payment methods, and global (150+ countries) coverage.

• Stablecoin APIs like Bridge have modularized an important piece of the crypto-to-fiat payments stack via stablecoin orchestration and issuance APIs, a piece of infrastructure that previously had to be custom-built for each use case.

• Payments infrastructure companies like Sphere provide developers and merchants with end-to-end payments APIs for digital currencies, simplifying money movement across every major network.

From an ecosystem perspective, it’s worth noting that Solana has emerged as an attractive foundation for developers in this space, as it was largely built to be scalable out-of-the-box. Payments companies like Sling, Code, Ottr, Decaf, Boop, and Tiplink — all founded within the last two years — have chosen to build on the Solana blockchain. 

Regulatory headwinds: “The Gatekeeper”

A lack of regulatory clarity has made it particularly difficult to scale a company in this space — but for the same reason, it provides a window of opportunity for new entrants. Incumbents like Venmo and CashApp, who’d otherwise be well-positioned to win here, would need to take huge risks (including headline risk and wasted engineering resources) if they decided to lead the charge for peer-to-peer crypto payments. These larger players would be entering fast-growing but vaguely-defined markets at a stake potentially too high for their comfort. This gray area makes the industry attractive for new, smaller entrants with a higher risk appetite than incumbents. 

Interestingly, as we’ve outlined, onramping has largely been solved, but offramping is the harder problem due to bank restrictions (and their general hesitancy towards integrating crypto), regulatory compliance (to ensure the offramp isn’t facilitating money laundering), and limited liquidity (to get out of crypto and into fiat). From the bank’s perspective, onramping money from fiat to a crypto exchange is simpler, as it is viewed as a standard outbound transfer. To offramp, however, users are liquidating a digital asset and transferring money from a crypto exchange, so banks view these incoming funds with more stringent policies and regulatory scrutiny.

Because companies have to repeatedly integrate with so many nuanced local regulations to support cross-border payments at scale, this undertaking becomes exponentially complex. Think of it this way: If Airbnb is a 2-sided marketplace (hosts and guests) and DoorDash is a 3-sided marketplace (consumers, drivers, and restaurants), cross-border payments companies are effectively n-sided marketplaces. 

Regulations can often act as a barrier to growth and efficiency improvements from new technologies; cue Bill Gurley: “The reason Silicon Valley’s been so successful is because it’s so f**king far away from Washington DC.” 

Shifting consumer behavior 

There have historically been two ways to generate meaningful revenue as a consumer business in crypto: build for the 1% of users who drive 99% of transaction volume, or build for the 99% of users who represent 1% of transaction volume. This tradeoff is particularly exemplified in cross-border payments: developing nations have a greater need for crypto at the retail level, but developed ones — who don’t need crypto as urgently, as financial infrastructure is well-established and understood — produce much more meaningful volume. 

“I think a lot of Westerners want to think of developing-world uses as a boring sideshow, and highlight Westerners trading monkey gifs as the only part of crypto worth talking about. But about 66% of crypto users live in the developing world… If nothing’s wrong with your country’s financial or political system, then you don’t need crypto.” —Scott Alexander, Why I’m Less Than Infinitely Hostile To Cryptocurrency

This has created somewhat of a chicken-and-egg problem for the space, as developers are incentivized to build products for the 1%, and consumers in emerging markets (with real need for new financial systems) are left largely underserved. We don’t believe it has to be this way. Building for this untapped market is not only good for the world, but good for business. As David Phelps writes, “If crypto succeeds long-term, it will do so with massive retail users who are more price-insensitive and represent a gigantic future market.” 

One of the biggest use cases for consumers to send money cross-border is remitting to family back home (global remittance flow value reached $830 billion in 2022), but it is a massive undertaking to educate and convert new-to-crypto users onto blockchain rails. Many of these consumers and their recipients use existing platforms like Moneygram or Western Union. Fees on these platforms are often exorbitant (see for yourself with Western Union’s fee calculator), but switching costs remain high. This is primarily due to the fact that shifting consumer behavior around money is difficult, because there is a greater trust buy-in than that of non-financial products. Because the stakes are so high when money is involved, consumers often resign to sticking with what “works,” even if a better alternative might exist. Markets aren’t always efficient — and this is particularly true for users onboarding to anything crypto-related.

Larger players like Chime and Revolut have a head start in terms of distribution, education, and awareness, making it even more difficult for competing products to enter the space. Similarly, buy-in from local banks and regulators can supercharge the viral growth engine of new products and help them reach market dominance more quickly. For example, Kenya’s largest cellular phone provider, Safaricom, launched the mobile money wallet MPesa in 2007. By 2010, MPesa became the largest mobile money network in the world, and is now responsible for transacting around 60% of Kenya’s GDP. New entrants without these affordances are faced with a steep uphill battle to launch their products and shift consumer behavior. 

However, this doesn’t mean newcomers aren’t finding creative ways to break into the category. For example, out of Argentina’s 5 million active crypto users, 2 million of them are on Lemon — largely credited to flexible product options, like a debit card that allows users to pay with crypto at accepting retailers, who receive fiat with Lemon’s infrastructure on the backend. Crypto integration toolkit Ramp recently made an aggressive push into Latin America and added 40 new fiat currencies to the platform. Peer-to-peer payments app Sling allows users to send money in any currency to 39+ countries, even if the recipient doesn’t have Sling installed. And blockchain-based microlender Jia uses lending as a wedge to gain distribution in emerging markets. The market is becoming increasingly dynamic; users are getting on board.

Laying the groundwork

Those who work in crypto know how frustrating it can feel — a concept like borderless payments is about as old as the industry itself, and yet we still have so far to go. But let’s not forget how far we’ve come, too. We believe the progress over the last few years, from infrastructure improvements to global regulatory advancements to new ways of reaching consumers, will underpin what’s to come for this category. We’re optimistic that 2024 and beyond will usher in even more companies who are building on the foundation of what consumers need. Of course, the future remains unknown. But that’s the exciting part. 

This piece is a working thesis, and we welcome your feedback to shape our perspectives and help us learn. Special thank you to Arnold Lee for informing our thinking on this piece. If it resonated, or if you are building something in this space, we would love to hear from you! You can reach us via Twitter DMs — Bridget here and Gaby here. 

TCG Crypto is an investor in Sphere and Jia. None of the information discussed herein is intended to be, or should be construed as financial advice, or an offer to sell or a solicitation of an offer to buy an interest in any security. The information set forth herein has been obtained or derived from sources believed by the author to be reliable and has been provided solely for informational purposes. Nevertheless, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness. Certain companies referenced herein are included by way of example and not companies in which TCG has invested to date nor companies in which TCG intends to invest.

In 2018, Dani Grant and Nick Grossman of USV published The Myth of The Infrastructure Phase, arguing that apps inspire infrastructure, not the other way around. It seems that five years later (almost to the day!), this debate is more prevalent than ever. 

If you’re looking to get caught up, the TL;DR is that there’s merit on both sides. Team Infrastructure argues that better tooling improves app UX and allows developers to build more quickly, while Team Applications maintains that across major technology platform shifts, breakout applications (like the lightbulb, the airplane, or AOL) came first before inspiring the infrastructure (the electric grid, the airport, or web browsers) to support broad adoption of those apps.

As much as I’d love to take sides in this debate, I believe it’s too binary of a conversation to begin with. Infrastructure and app needs constantly evolve off each other. Just like the move from dial-up to broadband to Wi-Fi, or the transition from calling for delivery to Seamless to DoorDash, the direction towards success isn’t linear — it’s adaptive on both sides. In crypto, we often like to anchor on existing technologies or use cases, but building in the space fundamentally requires being comfortable with the fact that it all may change. 

One heuristic that largely feels like a distraction in this conversation is the notion of “mass adoption” in crypto — building products for consumer scale. What does “scale” look like in crypto, anyway? On one side, you have businesses that look and feel like traditional consumer products but use blockchain rails under the hood, oftentimes for payments (like Beam or Sphere) or loyalty (like Medallion or Blackbird). Consumers of these products usually have a lack of interest and/or understanding in crypto, and so abstracting as much of the technology away as possible makes for a more seamless user experience.1 At the same time, on the entirely opposite side, you have crypto-native products for crypto-native consumers — a growing user base of individuals who love trying new products (often jumping through hoops to do so) and spending real sums of money within them.

Although both of these user personas are attractive from a business perspective, they often feel fundamentally at odds with one another. Existing tooling may “work” for the users and applications who have been here thus far — but if we want to evolve the users, then we’ll have to evolve the infrastructure, too. This is less of a binary (“we need a killer app!”) and more of a push and pull based on consumer need. Let’s use wallets as an example, as the consumer gateway to all activity in the ecosystem:

The first iteration of the crypto wallet (let’s call this Wallet 1.0) was largely limited in terms of use cases. Many, if not most, early crypto adopters cared deeply about the fundamental pillars of the technology, like decentralization, transparency, and immutability. Notably, if users wanted to engage with the technology, they needed to value, or at least understand, the concept of self-custody. A good example of a product from Wallet 1.0 is MetaMask, created by ConsenSys in 2016.2 MetaMask had 545,000 monthly active users in July 2020. This measure shot up to over 10 million by August 2021, driven by a surge of interest in “DeFi Summer,” where yield farming acted as a hook for consumers. At that time, it was an obvious choice for consumers to use MetaMask to take advantage of DeFi yields, as MetaMask was far more accessible (widely supported) than competitors.

The implication of this is that successful applications during this time were built with existing MetaMask users in mind — crypto-natives who had a wallet and wanted to use it. It made sense for consumer applications to be inherently crypto-native, based on the market opportunity provided by the infrastructure available. 

Many popular wallets today are still primarily self-custody, serving a similar user base. However, over the past few years, we also saw the pendulum swing entirely to the other side, as consumer needs continued to evolve. Specifically, we saw the proliferation of tools that enabled an easy onboarding to a crypto wallet, so net new users could engage in blockchain-based applications (like NBA Top Shot or Starbucks Odyssey) without having to worry about seed phrases. Let’s call this Wallet 2.0, brought forth by infrastructure like Magic and Web3Auth. In many ways, this solved the problems of Wallet 1.0, making wallet creation seamless and enabling traditional consumer companies to add crypto-native elements to their businesses. But in other ways, it created entirely new problems: instead of having a few self-custody wallets to be used across all dApps, users now had a new wallet for every single application, almost like getting a co-branded credit card for every store. These app-specific wallets siloed consumers into vertical brand ecosystems and removed the potential for portability, as keys were no longer custodied with the user.3 Without the ability to truly own your assets and take them with you… why use crypto at all?

“Though wallets and applications are users’ first touchpoints into crypto, we’ve positioned ease-of-use and interoperability as diametrically opposed.” — Nitya Subramanian

Consumer interest largely forced this change. While Wallet 1.0 catered to crypto-native users, largely focused on trading, Wallet 2.0 swung the pendulum far, introducing brands and mass-market consumer experiences. Now, the pendulum seems to be settling somewhere in the middle — what we can call Wallet 3.0, which combines the interoperability of the first iteration (true self-custody) with the powerful consumer UX of the second. This is being accomplished by service providers like Capsule, which leverages distributed multi-party computation to empower developers to build applications that can interact in-context with user assets on users’ terms, without sacrificing interoperability. As applications and infrastructure continue to pair, wallets become expressive building blocks for consumer identity, and more of the ecosystem begins to compound. 

The evolution of wallets over the last decade shows a constant push and pull between infrastructure and applications. It felt impossible a few years ago to imagine crypto wallets without seed phrases. Now, the opposite feels equally true. In an ever-changing ecosystem, it often feels comfortable to anchor on existing use cases, but success requires being fundamentally open to evolving them.4 All of this can change, and it will. And that is a reason to be excited.  

Thank you to Jarrod Dicker, Nitya Subramanian, and Ben Roy for their perspectives and feedback on this piece.

TCG Crypto is an investor in Sphere, Medallion, and Capsule. None of the information discussed herein is intended to be, or should be construed as financial advice, or an offer to sell or a solicitation of an offer to buy an interest in any security. The information set forth herein has been obtained or derived from sources believed by the author to be reliable and has been provided solely for informational purposes. Nevertheless, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness. Certain companies referenced herein are included by way of example and not companies in which TCG has invested to date nor companies in which TCG intends to invest.

“I think a lot of Westerners want to think of developing-world uses as a boring sideshow, and highlight Westerners trading monkey gifs as the only part of crypto worth talking about. But about 66% of crypto users live in the developing world. More people own cryptocurrency in Africa than in North America… If nothing’s wrong with your country’s financial or political system, then you don’t need crypto.” — Scott Alexander, Why I’m Less Than Infinitely Hostile To Cryptocurrency

Originally published on the TCG Crypto Mirror blog.

Micro, small, and medium enterprises (MSMEs) account for 9 out of every 10 businesses, half of global GDP, and two-thirds of jobs worldwide.1 And yet, there is an estimated $5 trillion credit gap for MSMEs across emerging markets, according to the IFC’s recent analysis by the SME Finance Forum.

At TCG, we believe crypto offers unique ways to address these challenges. In this piece, we’ll outline the emerging market credit gap and the pain points that come with existing small business lending practices in these areas. We’ll introduce Jia, which we believe offers a differentiated solution by bringing blockchain-based lending to small businesses, rewarding borrowers who repay with ownership. Lastly, we’ll share some macro and market observations that make this opportunity particularly exciting to us. We are thrilled to partner with Jia as lead investors in their pre-seed round. Read on for our shared vision for the future:

Understanding the emerging market credit gap

Small businesses in developing markets are commonly overlooked by traditional financial institutions due to high collateral requirements, lengthy documentation processes, and a lack of credit history for many small businesses.2 With limited access to reasonably priced upfront capital, many MSMEs instead rely on informal lenders for financing to run their businesses. This often takes the form of communal finance — in emerging markets, many individuals are members of local savings-and-credit organizations that come together to pool cash & lend on a lottery system. 

These groups are known as SACCOs and chamas in East Africa; tandas, cundinas, and juntas in Latin America; paluwagan in the Philippines, arisan in Indonesia and chit fund in India, to name a few examples. They have existed for generations and are built on a fundamental requirement of trust. Importantly, members of these groups are owners as well as customers, contributing to the community via interest revenue from the value they create as businesses.

These communal finance groups work quite well at a local level, but the model breaks beyond that. Many rely on analog processes and often have a single manager running the entire operation. Additionally, a high trust coefficient is achievable at a local level, but difficult at scale. As a result, small businesses in these ecosystems are left with limited access to capital, with the ceiling of opportunity no higher than their immediate networks. 

Startups across both web2 and web3 have worked to fill this gap, but suffer from two key challenges. The first is low customer loyalty, largely because lenders treat borrowers in a transactional way. Their incentives are to maximize origination and repeat rate (borrower == customer), squeezing as much value out of borrowers as they can. The second challenge is high costs, leading to high interest rates for borrowers. The cost of capital for emerging market MSME lending is quite high, as central banks typically lend only to large commercial banks and microfinance banks at high rates (due to perceived risk).

Within crypto specifically, most lending protocols require ~150% collateralized crypto assets, which is an almost impossibly high barrier for MSMEs in emerging markets. And while undercollateralized lending protocols like Goldfinch, Credix, and MoHash have emerged more recently, many operate more as alternative debt facility providers to fintech lenders, not directly serving small businesses on the ground in these areas. 

“In my understanding, most [DeFi] founders have pivoted towards building products for institutions. Why? Because you can build with scrappy UX, focus on a handful of customers and claim to have billions in TVL… It made commercial sense. The vast majority of the volume came from desktop users. On the other side, exchanges see close to 90% of their userbase coming through mobile apps. At the crux of building on desktop vs mobile is this tussle between volume of capital and human mindshare.” — Joel John, On building mobile first

You’ve probably guessed by now the question we can ask from here: How do we take the savings-and-credit organizations that work so well on a local level and combine them with the scalability, efficiency, and ownership offered by decentralized finance? 

Introducing Jia

Enter Jia, which provides blockchain-based loans to small businesses and then rewards borrowers who repay with ownership, enabling them to create wealth for themselves and their communities.3 Jia is led by a group of global experts in credit, fintech, and consumer products. Co-founders Zach Marks and Cheng Cheng come from the early team at Tala, a pioneer of the fintech lending industry, where they helped to launch the world’s first mobile microcredit app and grew Tala’s user base from ~6,000 in 2016 to over 6M borrowers over the next six years.

We believe Jia is a global solution for a global problem. Latin America has seen soaring crypto adoption as a result of high interest rates and low trust in banks. West Africa has a strong tech ecosystem, hungry for credit and stablecoin products. East Africa is a frontier for fintech innovation with a friendly regulatory environment. South Asia has the highest proportion of financially constrained microenterprises. And East and Southeast Asia have the highest MSME credit gap by dollar amount of any region in the world, with booming crypto adoption from people eager for solutions. When it comes to the global regulatory landscape, every market is unique, but the vision remains the same: democratize the ability to transact and build equity, no matter who you are. 

Jia reaches borrowers through a simple mobile lending app that integrates with small businesses’ existing workflows. After a short onboarding and sign-up process, borrowers submit a loan application (KYC, loan request information and business document upload), which is standard across markets and similar to borrowers’ experiences with other small ticket personal loans. On the backend, Jia employs an automated, data-based credit scoring model to underwrite the borrower. When it comes to loan disbursement and repayment, borrowers can choose how they’d like to handle their loan. Today, most have it disbursed in fiat to their local mobile money wallet or bank account, but an increasing number are experimenting with keeping their funds in a crypto wallet that Jia helps them open. For the borrowers who choose fiat, Jia handles on/off-ramps, helping them access their loan easily while simultaneously working to build an on-chain credit history for them.

All of this is underpinned by the Jia token, which introduces an embedded incentive model and makes borrowers feel like owners, not just customers. For example, small business owners can earn Jia’s native token by taking and repaying loans, depositing savings into stablecoins, and referring friends to join the community. As borrowers accumulate Jia tokens, they can leverage it as collateral to get their loan faster and with better terms (cheaper interest rates, etc.). To incentivize community support and word of mouth, borrowers can also earn Jia rewards by successfully bringing members of their business networks and other local groups into the ecosystem.

The Jia token will likely be the first crypto asset that many of these borrowers own. By building trust with borrowers through this initial touchpoint, Jia has the opportunity to more seamlessly onboard them to other crypto use cases, like holding their money in a US dollar stablecoin, which many borrowers have already requested.  

An important note here is that consumers in emerging markets are often faster at adopting new technologies than individuals in more developed areas. A great example of this is MPesa, a mobile money wallet launched in 2007. MPesa in Kenya had far earlier and broader adoption than any mobile financial services product in the United States. Today, MPesa is responsible for transacting around 60% of Kenya’s GDP. Consumers in emerging markets are hungry for new solutions and are willing to try them. 

On the other side of this are the individuals who act as liquidity providers for the Jia network. With Jia, investors can access diversified and sustainable yields backed by real-world value creation and assets. For retail and institutional investors alike, Jia may be someone’s first touchpoint into expanding financial access in emerging markets. Crypto liquidity pools enable this type of accessibility, allowing anyone to put their capital to work for real-world impact.

Jia is launching its initial pool on the Huma protocol, an income-backed DeFi protocol that enables businesses and individuals around the world to use their income and receivables as collateral to borrow against. You can read Huma’s whitepaper here and learn more about the partnership in this announcement. 

Macro & Market Observations

At a macro level, private debt has remained an attractive asset class for investors in times of market volatility, given its reliable yields and diversity of strategies. According to McKinsey’s 2023 Global Private Markets Review, private debt fundraising hit an all-time high in 2022, while other private classes fell considerably.

Emerging markets private credit follows a similar trend, with investment increasing year over year to reach its highest level on record at $10.8 billion in 2022. During periods of inflation and economic uncertainty, the sector seems to perform well in contrast to equities markets. 

Bringing this real-world economic activity on-chain benefits both the investor and the borrower. Investors get democratized access to real yield, while borrowers get access to blockchain liquidity, with ownership as a mode to long-term wealth creation for themselves and their communities. The use of blockchain also reduces the large transaction costs (typically passed on to the end borrower) often associated with private credit markets, and enables the creation of on-chain credit histories for borrowers to build reputation over time.4

“Tokenization of financial and real-world assets could be the killer use case driving blockchain’s breakthrough, with tokenization expected to grow by a factor of 80x in private markets and reach up to almost $4 trillion in value by 2030.” — Citi Global Perspectives & Solutions; Money, Tokens, and Games

A number of decentralized applications (dApps) have already tokenized hundreds of millions of dollars worth of real-world assets on-chain. To begin, MakerDAO has arguably made the most progress in terms of raw adoption, with nearly $1B of real-world assets backing the decentralized stablecoin Dai. Introducing real-world assets as collateral enabled MakerDAO to scale the amount of Dai issued into the market, harden its peg stability, and significantly increase protocol revenue (Chainlink). 

In December 2022, MakerDAO partnered with Centrifuge (an on-chain ecosystem for structured credit) and BlockTower Capital's credit arm to deploy $220M into real-world assets. This partnership marked the largest on-chain investment in real-world assets to date, as well as the first institutional credit fund to bring their collateralized lending operations on-chain.

Earlier this year, Maple Finance, a blockchain-based credit marketplace, announced plans to expand to tax receivables financing, the protocol’s first step in a new strategy to bring traditional financial investments on-chain. London-based public company AQRU will manage this new liquidity pool, which Maple says can scale up to $100M in size. 

Just last month, Franklin Templeton announced the launch of the Franklin OnChain U.S. Government Money Fund, the first U.S.-registered mutual fund to process transactions and record share ownership on a public blockchain. 

We believe these are all massive opportunities, as we believe real-world economic activity will only continue to move on-chain. And on the other side of the globe, at a much more micro scale in terms of loan size, Jia shows that this financial innovation does not solely exist for bankers and traditional institutions, but now for billions of people around the world, too.

We are thrilled to partner with the Jia team as they work to bring DeFi lending to the individuals who need it most. We’re honored to work more closely with Zach and Cheng as lead investors in their pre-seed round, along with friends around the table at BlockTower Capital, Draft Ventures, Hashed Emergent, Spice Capital, Awesome People Ventures, and more. This is a big vision and it won’t happen overnight. If you’re interested and would like to get involved, Jia is hiring. To join Jia’s early community and stay updated on progress, you can mint their free commemorative NFT here. 

Let’s make finance more fair, together. 

Thank you to smac, Zed Tarar, and Ben Roy for their perspectives and feedback on this piece. 

TCG Crypto is an investor in Jia. None of the information discussed herein is intended to be, or should be construed as financial advice, or an offer to sell or a solicitation of an offer to buy an interest in any security. The information set forth herein has been obtained or derived from sources believed by the author to be reliable and has been provided solely for informational purposes. Nevertheless, the author does not make any representation or warranty, express or implied, as to the information’s accuracy or completeness. Certain companies referenced herein are included by way of example and not companies in which TCG has invested to date nor companies in which TCG intends to invest.

As a self-proclaimed chronically online person, I’ve recently come to terms with the fact that much of my identity — from the places I go out to eat, to the way I decorate my apartment, to the clothes I wear… even to the jobs I take or the friends I have — has been defined by code. Perhaps it is a result of the fact that the state of social media today may be less of an interaction between a user and a given “network” of others, but instead an interaction between a user and what we can call an ‘algorithmized’ version of self. I am curating my feed, but moreso, my feed is curating me.

In a recent piece, I wrote about the concept of linguistic relativity, or how we use language as a mode for coming to terms with our surroundings. I believe there is a version of this concept that extends to human behavior. Our language structures our experience of the world. Our interfaces govern how we interact with it.

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Take TikTok, for example. TikTok’s emphasis on fifteen-second video creation pushed short-form entertainment to the forefront of consumption. It now feels exponentially harder to watch a Netflix show, or even a YouTube video, and stay engaged, versus opening up TikTok to be captured within only a few moments. You see this with web3 entertainment company Mad Realities, which originally began with a YouTube video series but pivoted, and then grew a TikTok following to over 350,000 in four weeks by launching a slate of original shows:

Along a similar vein, we’ve seen the TikTok-ification of the music industry, where as economics moved from CDs and downloads to streaming, songs got shorter. Even today, with TikTok as one of the major distribution channels for new music, we see artists add “TikTok-approved” verses into their songs, like Jack Harlow’s “First Class” or Drake’s “Toosie Slide.” The medium fundamentally altered the message.

 New York Times columnist Ezra Klein writes about this, too, arguing that “the way Instagram works is changing how teenagers think… it is the fault of the platform – it is intrinsic to how Instagram is designed, not just to how it is used.” Our physical lives increasingly reflect our digital reality, shown by places like the Museum of Ice Cream and other shops and tourist destinations that have redesigned their locations to be more “Instagrammable.” 

We see this particular flavor of technological determinism all over the Internet. Another popular example is Twitter’s original character limit. Because Twitter began as an SMS text-based service, the original Tweet length was limited to 140 characters, partly driven by the 160-character limit of SMS, with 20 characters reserved for usernames. Of course, the collateral damage of this seemingly innocent choice was beyond what we could have anticipated, as we were crushed under the weight of fortune cookie accounts and the dreaded “Time for a thread.”

“We shape our tools, and thereafter, our tools shape us.” – John M. Culkin (1967)

I acknowledge this is a pretty bleak outlook so far. But I’d like to argue that herein lies the opportunity: better interfaces will lead to better products in return. As my partner Jarrod Dicker articulates well, change the outputs, change the inputs. I have a couple ideas for where I’d like to see this in web3 consumer products:

WALLETS AS BROWSERS

The interface of a wallet governs how we interact with the tokens held at that address. For example, most wallets display NFTs as square images, which resulted in almost every NFT project in 2021/22 being… well, a collection of square images. Squares breed squares. In conversation on this topic, one developer told me, “I was more focused on making my NFTs render great on OpenSea than actual contract code.” 

So what happens to the inputs when we change the outputs? My guess is the interfaces that respect the NFT as a file format — whether the NFT be a JPG, GIF, MP3 or otherwise — will indirectly be responsible for the creation of net new types of cryptomedia. I want my wallet to be a browser. What’s a Music NFT if I can’t listen to it? What’s a piece of Digital Fashion if I can’t try it on? Wallets are more than just a display case. I write about this more here. 

BLOCK EXPLORERS AS THE “FRONT PAGE”

If we want better cryptomedia, we need better ways to interact with it. Better outputs, better inputs. My view is that a lot of this starts with the block explorer, which is almost analogous to a search engine for the blockchain. 

Block explorers claim to be unbiased pieces of software for visualizing blocks, transactions, addresses, and network metrics (transaction fees, block size, etc.). However, I believe the interfaces of these tools are quite biased, as they selectively choose which information to bring to the forefront, and which to hide under the hood. Take Etherscan, for example, where on-chain messages (let’s say a secret admirer wanted to send a note to your wallet) are not actually listed as messages, but instead as “transfers” of 0 ETH from one address to yours. To actually find the message, you’d need to click into the transaction hash, click another button for “More,” and then toggle to view the input data as UTF-8. No wonder nobody sends messages this way. 

This is one of many examples of how I see bias in block explorer interfaces. In this case, I imagine a better output (an easier way to read these on-chain messages) would lead to much more interesting inputs. Flirting on-chain! Murder mystery stories! The Amazing Race… but crypto! Anyway, you get the point. Better interfaces, better products.

It’s not a block explorer, but a similar tool that does this particularly well is Dune Analytics, which updates its homepage dynamically based on trending Dune dashboards (curated sets of on-chain SQL queries). In a way, the Dune homepage becomes a “front page” for what matters in crypto at a given time. This is what the homepage looked like on June 13, 2022, the day Celsius announced they were halting all swaps, withdrawals, and transfers due to “extreme market conditions,” triggering a broader selloff: 

Dune isn’t just data analytics. It’s journalism. The point is, in a world of public data, every company is a media company. The tools to parse, share, and curate this web of information aren’t just tools, they’re interfaces, and the interfaces with better outputs will lead to better inputs, which is why we’re here to begin with. I’m looking forward to seeing what other opportunities might emerge in this vein.

New interfaces will change the way we both create and consume media on the Internet. This won’t just affect the product experiences themselves, but also the way we organize to develop content and applications to be consumed by others. Blockchain technology is a massive unlock on this front, because it democratizes the ability for any individual to see important activity and information at the inception of its development, and it changes the way these products are built in return. While in traditional media these roles all existed with a banner brand, today they are able to be pieced together through our collective ability to create from the information we find. And that is massive.

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This piece was written for the inaugural Boys Club Zine. If you haven’t checked it out already, you should — with authentic storytelling, beautiful curation, creative ad models, and new modes of distribution (both print & mint!), the Zine is brilliant. I am so grateful to Tash, Deana, Monty, and the entire Boys Club team for including me alongside so many incredible individuals.

Thank you to David Phelps, Kiran Cherukuri, Soren Wrenn, Jarrod Dicker, and many others for informing my thinking on this piece. If the piece resonated at all, I would love to hear from you. You can reach me via Twitter DMs.

The timeline has seen a lot of talk around creator royalties and the broader NFT marketplace wars recently. Without commenting on current events too directly, I wanted to share some high-level thinking around marketplaces, beginning with the following excerpt from my partner Peter Chernin’s conversation with Patrick O’Shaugnessy on Invest Like the Best:

“The other great example of [aggregation] is the shopping mall. I don’t know when they exactly started, I guess ‘50s, ‘60s. The shopping mall seemed like Oh my god, this is heaven. I can’t believe there are 150 stores in this place. And I can go buy clothes, I could go buy sporting equipment, I could go buy electronics, I could go buy anything. It’s amazing. You go to [the shopping mall] now, and it just seems really middle. It’s not the best clothes. It’s not the best sporting goods. It’s not the best sneakers. It’s not the best electronics. Consumers have moved on from those sorts of things. It’s a really broad thesis. But it goes back to that notion of: technology gives you choice and control.

It used to be that the only place you could get any choice was to go to the shopping mall. You were happy with the 100 stores that were there. You wake up today, you can click on Amazon, basically purchase every single thing that’s ever been made. And when you want it, then get it delivered. You don’t have to drive, you don’t have to navigate your way through the mall. So this notion of choice and control is inexorable.” —Peter Chernin, Invest Like the Best (25:34)

Listening back to this podcast, I can’t help but think of OpenSea as crypto’s shopping mall. When NFTs first took over consumer mindshare, OpenSea really was the best of everything: consumers would go to OpenSea to both search and discover new projects, and NFT creators would gladly “pay rent” to OpenSea the same way stores would to the shopping mall. 

Of course, that’s not the case anymore. As crypto has continued to evolve, technology has increasingly become a commodity, and liquidity has no loyalty for consumer businesses. More specifically, aggregators like Reservoir, Firstmate, and Snag Solutions1 allow us to replicate liquidity across marketplaces, allowing NFT project creators to spin up their own verticalized marketplaces while leveraging aggregated liquidity.2 In retrospect, it never quite made sense why these NFT projects would spend huge amounts of upfront time and capital to build a beautiful mint site for primary sales, and then immediately let go of their customers by allowing them to move to third-party marketplaces (like OpenSea) for secondaries. With better tooling, these projects & companies now have a greater ability to own the vertical business — and as marketplace fees continue to trend towards zero, the moat becomes verticalized, too: brand, community, experience, and trust are all currency.3

We’re beginning to see this take hold with major NFT projects. Some examples include Pudding (built specifically for the PROOF ecosystem), Sound Market (for music NFTs), and Truth Labs’ Goblintown marketplace. My favorite example these days is gmoney’s 9dcc.market, which launched in August of last year on top of Reservoir, aggregating listings from the major marketplaces and putting them in one place to make it easier to buy and sell 9dcc assets. The primary innovation is the incentivized loyalty program for the 9dcc network, which focuses in part on encouraging the payment of royalties:

Collectors who honor royalties (on any platform) will receive loyalty rewards. Buyers who trade on a platform that doesn’t honor royalties will receive zero points and will be ineligible for benefits.4 I’m a fan of this framework and am excited to see how it plays out over the next few months. 

Another way of thinking about this is that most marketplaces focus on curating the sellers, but the real opportunity (especially now) may be in curating the buyers instead. Most NFT creators want collectors, not traders. No marketplace today differentiates the two, and it’s frankly difficult to segment usage between these two distinct groups.5 As I wrote back in October, I see a world where a new artist-focused NFT marketplace is spun up featuring top artists and up-and-coming projects, and the only buyers allowed on the site are those who have opted in to paying royalties on competing marketplaces. For what it’s worth, this is very similar to the system employed by high-end auctions in the traditional art world. Galleries curate their buyers and do quite a bit of diligence to select which collectors actually get to participate (more on this here6 and here).

Using a tool like Guild, you could get really granular with this, segmenting users into different groups based on wallet activity. These discrete user groups could receive different levels of permissioning on the application itself (this could even be done on the protocol level, to provide access to a whole suite of tools based on on-chain activity & reputation). But I digress…

If you’re building in or around this space, I’d love to chat with and learn from you. As always, my DMs are open.  

Thank you to David Phelps, Dariya Khojasteh, and smac for informing my thinking on this piece.

“While tools like Nansen and TokenTerminal increasingly make it easier to verify and assess “real” economic activity on the networks we deploy money into, data literacy has not risen in proportion. And it takes a while before the market picks up on the skills to do that.” —Joel John

Over the last couple years, we saw a huge focus in crypto towards “onboarding” — bringing non-crypto natives into the space with their first wallet so they could engage in crypto products. 

For a period of time, this worked, with BTC and ETH both hitting all-time highs in late 2021 and OpenSea reaching peak volumes (approximately $5 billion in January) in early 2022. It was only two years ago when Beeple sold an NFT for $69 million at Christie’s, positioning him among the top three most valuable living artists and catalyzing the gold rush in digital art that took place in the ensuing months.

Of course, this washed away about as quickly as it flooded in, leaving ghost towns of crypto consumer products and a whole cycle's worth of retail investors scarred from their losses. Many of the catastrophic implosions of this past cycle — particularly centralized finance products that thrived on excessive risk and corrupt custody practices — should never have been considered to be crypto at all.

The lesson? The things that make crypto more “mainstream” — hyped NFT projects, fiat onramps, DeFi savings accounts, and more — are often exactly the things that make it more dangerous for retail investors. Today, the odds of success in crypto are wildly in favor of those with highly specialized technical & data analytical skills.

This is why I am excited about consumer products that make crypto human-readable and analyzable. These products level the playing field, taking something with a technical UI/UX and making it user-friendly. Similar to the emergence of the command line in consumer products (I wrote about this here in 2020 after watching the rise of companies like Superhuman and Linear), human-readable web3 tools accelerate consumer fluency in crypto, making every user a power user. Some tools I have found particularly interesting in this regard:

• Dune Analytics is a SQL-based tool for visualizing and contextualizing blockchain data, helping individuals find answers to questions like: How much volume flows through Uniswap each day? Which decentralized exchange has the highest volume? How did brands like Nike and Adidas perform with their respective NFT drops? Some of my favorite creators (wizards) on Dune include Richard Chen, Eliasimos, and Hildobby. 

• Dune Ninja is a productivity tool for Dune Analytics, enabling users to convert natural language to SQL queries. Analysts, traders, and developers can analyze market data for multiple chains without needing to dig into complex SQL mechanics. 

• Once Upon is a human-readable block explorer, allowing individuals to monitor and understand what is happening on the Ethereum blockchain. This block explorer has become my daily driver over Etherscan. I use it to track wallets (or curated groups of wallets) and monitor NFT sales and mints, among other things.

• Stelo is an open-source extension that interprets crypto transactions into plain English, keeping individuals safe from phishing and scams. The interface sits in between websites and extension-based wallets (like Metamask) to enrich transactions with relevant on-chain and off-chain data, including the contract name, dapp website, value at risk, and more. You can learn more here. 

• Blowfish is a proactive defense tool for web3 wallets. Users can simulate transactions, messages, and domains in real time, making it easy to identify and stop fraud before it happens. Blowfish is live on Ethereum, Solana, and Polygon. 

• Harpie is an on-chain firewall, monitoring pending transactions for potential attacks (scam sites, phishing, private key theft, etc.) and securely moving funds away from vulnerable wallets before they can be stolen. Read the docs & whitepaper here.

I believe tools like these are bringing us to an inflection point in consumer technical sophistication. I also predict they will empower individuals to embrace crypto-native values like self-sovereignty and accountability, as they provide routes for non-technical consumers to both read and understand contract code.

If you are building consumer products that make using crypto more efficient, accessible, or collaborative, I would love to hear from you. As always, my DMs are open. 

Thank you to Jordan Messina, Ria Bhutoria, Ben Scharfstein, and many others for informing my thinking on this piece. 

Related: We Don’t All Need to Learn to Code, a talk from David Ulevitch in 2020

HISTORY OF DIGITAL SOCIALIZING

To date, every iteration of the Internet has been ushered in by a technology to help us better communicate. This began with Internet Relay Chat (IRC) in 1988, and later in the 1990s, we saw the first major instant messaging platforms (ICQ, AIM, MSN, and Yahoo) all battle for market share. The early 2000s became a “gold rush” of sorts for instant messaging, with SMS becoming a global phenomenon alongside the advent of technologies like Apple iChat (compatible with AIM) in 2002 and Skype in 2003. And of course, the last decade of software was supported by messaging apps like WhatsApp, Telegram, WeChat, and Signal, alongside social media networks like Snapchat and Instagram. Now, as we look towards the next iteration of the web — an Internet with a native identity layer for people, by way of the wallet — it’s clear that growth is stunted by a missing communication layer. As Tomasz Tunguz put it in his related piece, messaging is “the bottleneck.”

Messaging is our primary form of digital socializing. As defined by Dan Romero, the “vertically integrated stack for social” is identity, hosting, moderation, and algorithm — we believe that messaging is the interface of this stack. To communicate with different parts of a protocol, we send different forms of data, whether it be a message from one-to-many or a message signature to sign a transaction. Every on-chain action is a message in some form, even if they aren’t represented in a typical chat interface. Seeing these as a single thread of messages outgoing from your wallet would transform the way we browse the web.

WEB3 MESSAGING

So what does web3 messaging look like today? For the most part, we jump to brute-forced web2 platforms like Discord and Telegram, using tools like Guild on top for access management. When we connect our wallet to various consumer applications (token-gated sites, shopping pages, communities, dApps, etc.), we typically use workarounds to fill in the communication gap, like syncing your email address to your OpenSea or Mirror account to get updates.

Crypto messaging lives on Telegram and Discord, but the search for a crypto-native solution needing just a wallet address has spurred the beginnings of 50+ companies. Businesses like XMTP and Dialect have taken the protocol-first approach (build a communications network, with messaging as a feature), while others are building application-first with new web3-native chat apps, like Tribes, Geneva, Bunches, and Inb0x. Existing web3 companies like Nansen, Rarible, and WalletConnect have similarly begun to implement messaging, and on the enterprise side, we are excited by companies like Dispatch, Lines, and Notifi that help businesses and communities reach users directly. New wallet-based social apps have also emerged, like Farcaster and Lenster, both built on top of their own respective protocols.

We believe the potential for web3 messaging extends far beyond a skeuomorphic peer-to-peer chat. It’s protocols talking to users, users talking back to protocols, and all forms of information exchange getting pushed on-chain. Many of these actions are thought of as middleware today — the forgotten part of the tech stack — but every interaction we have on-chain transfers data in the form of messages.

We hear a lot of conversation around “hooks” for crypto-native messaging, like permissionless social graphs, verification, and token-gating, but these are features of web3 messaging, not the core use of it. None of these features have made on-chain messaging competitive with Telegram or Signal, because convenience (almost) always wins over quality. The reason these messaging protocols will be more convenient is they will unlock a whole new recipient of the message: the protocol itself. We haven’t gotten there yet because currently, messaging is regarded as an end, but web3-native messaging is a means, not an end. It’s a byproduct of completing actions. The familiarity of the format means we can simplify flows and better integrate new interfaces, experiences, and activities.

NEW INTERFACES

Per this new way of thinking, every on-chain action is already a message. But right now, the tech that powers it siloes every action from the others. We may find out about a collection on Farcaster but mint the NFT on Zora, confirm the transaction in MetaMask or Rainbow, and get updates about the project in Discord. If we acknowledge that every single one of these actions is a message between provider and consumer, it makes the most sense if it were all aggregated into a continuous stream of messages, centralized in one place, without compromising user identity.

This is not to say that messaging as it exists today will not take off in web3 — there are plenty of reasons why we will use peer-to-peer web3 messaging (think: sending an in-game pseudonymous message, or placing an offer on an NFT in someone’s wallet), but as platforms begin with this new functionality, user-protocol messaging will become a ubiquitous format. The ability to see threads of messages between wallets and dApps would, in our view, transform how we envision interacting with the Internet. With a communication layer built in, wallets become superapps. (Note: We also haven’t even scratched the surface of what it might look like for a user to talk directly to a protocol via something like ChatGPT… but that’s a piece for another time.)

WALLETS AS SUPERAPPS

Wallets are, arguably, the de facto browser for web3, and they serve as the unlock for consumer experiences across token-gated sites, marketplaces, communities, dApps, and more. The problem we’ve run into as an industry is that now we have all of these parties (individuals, brands, businesses, communities) that want to talk to each other but don’t know how. Localizing all of these interactions in the wallet would make it a superapp.

For example, how do members of a DAO get notified that a new round of governance is open? Currently, it’s on Twitter or Discord, or hosted on an external site like the Nouns Prop House. The user has to seek out the action, while it should be entirely the other way around. What if these action items (like voting) were embedded in the wallet? New products like Daylight are exciting steps towards this future. If you are building in this space, we’d love to hear from you.

WHAT COMES NEXT?

With an integrated communication layer, wallets become inboxes, and the inbox becomes the nexus of identity. This is where you create, contribute, and communicate across the web. Each wave of the web was ushered in by a new mode of communicating: early Internet forums brought people online, social networks birthed platforms. We believe the ability to talk directly to the protocol is the next innovation, bringing middleware to the frontend and leveling the playing field between people and protocols in the production of new media. If messaging is redefined as the means, then we really don’t know what the ends might be — and that is the exciting part.

This piece is a working thesis, and we welcome your feedback to shape our perspectives and help us learn. Thank you to Mason Nystrom, Henry Lau, Jonathan Moore, and many others for informing our thinking on this piece. If it resonated, we would love to hear from you! You can reach us via Twitter DMs — Sophie here and Gaby here.

“We’re in the midst of a technological revolution. We all know it, we talk about it, but we have to live it. The most difficult step is just to go for it.” — Helmut Lang, on being the first designer to unveil a collection on the Internet (1998)

TL;DR: We at TCG Crypto are thrilled to be backing what we believe are two of the most innovative companies in digital fashion, DRAUP and Tribute Brand. We share our excitement for the space and outline our thesis on where we believe digital fashion is headed in the piece below.

Originally published on the TCG Crypto Mirror blog.

What was your first experience buying digital clothing online? My memories from my first few years on the Internet are blurred across Webkinz outlet shopping, RuneScape party hats, and Club Penguin monthly catalogs. A few years later, as I downloaded Snapchat for the first time, I remember trying on dozens of outfits for my Bitmoji to wear. And even more recently, I’ve swiped across Instagram filters to see which pair of AR sunglasses would suit me best (so far, I’ve settled on this pair of Nouns glasses).

I commonly hear people say that digital fashion is the future — the “next big thing” in consumer Internet. I’d argue it’s already here, and as people continue to live and display more of their lives online, I believe the market for digital fashion will only get bigger.

Digital fashion largely had its origins in gaming (to no surprise: both industries share common ground as first-movers via emerging technologies to create new forms of self-expression). There are 3.4 billion gamers worldwide, and the market for in-game “skins” (cosmetic add-ons) is estimated to be ~$40 billion a year, compared to the global apparel market at $1.5 trillion. We’ve also seen Internet users move from interactive to immersive over the last few years, spending increasing amounts of time on platforms like Roblox and Fortnite. Brands have followed suit, with Louis Vuitton, Versace, and 100 Thieves debuting virtual goods in League of Legends, ComplexLand, and Animal Crossing, respectively. Remember how the next big thing often starts out looking like a toy?

But digital fashion certainly isn’t limited to just gaming. Back in 2013, Japanese virtual pop star Hatsune Miku was dressed by Marc Jacobs for an upcoming arena tour. The phenomenon continued in 2016, when virtual influencer Lil Miquela blew up on Instagram, working with brands like Prada and Calvin Klein and eventually being named one of TIME Magazine’s 25 Most Influential People on the Internet in 2018.

The Internet has already permanently altered the way we buy our clothes, and social media has changed the way we wear them. On average, an item of clothing is worn 7 times before being thrown away. As of 2019, the fashion industry accounts for 10% of global carbon emissions (more than all international flights and maritime shipping combined). Last year, sixteen fashion brands (including Hanes, H&M, Levi Strauss & Co., and Nike) collectively recorded profits of at least $10 billion while paying their garment workers an average of $147 a month.

Fashion’s equity problem doesn’t stop there. More than 80% of majors from top fashion schools are female, but only ~14% of the top 50 major fashion brands are run by a female executive (2018). And for new entrants to the space, it’s not uncommon to be faced with high production costs or an “illuminati of tastemakers” restricting exposure.

We believe digital fashion solves these issues. Companies like MetaFactory are creating physical clothes with digital counterparts, while fashion houses like The Fabricant are designing digital clothes for avatars. For the first time, the industry feels equitable: anyone in the world can create digital clothing, as long as they have a computer and software skills. There’s also no need for gated fashion weeks when traction is attainable via social media. And with a blockchain providing proof of ownership, designers can be fairly compensated for their work.

Digital fashion is, at its core, an identity business. 60% of Gen Z and 62% of Millennials believe that how they present themselves online is more important than how they present in person. What we wear is (and always has been) a medium for understanding who we are and what we care about.

So where does web3 come in? We’ve already seen exciting proof points for the industry, from the first ever digital couture to be auctioned on the blockchain in 2019 to these RTFKT sneakers raising $3.1 million in under seven minutes in 2021. But today, web3 fashion is only a fraction of a percentage of the physical fashion industry, due to what we believe is a tradeoff in utility (being able to wear the garment where it can be admired, like Fortnite or Instagram) and monetization (being able to own the garment, but not having anywhere to showcase it). Our view is that the unlock for web3 digital fashion will be in creating functionality for the digital fashion as a garment (I can try it on; I can wear it when, how, and where I choose) as well as functionality for the digital fashion as an asset (I can sell or trade it; I can make money from my digital fashion through renting it or wearing it in a public space).

The physical fashion industry often falls victim to the Horseless Carriage Syndrome, where new technologies are viewed only in the context of what came before them (the same way cars were first called horseless carriages). This is precisely why we are excited to be making investments in the space. The use cases for digital fashion are limited today, but will continue to expand over time, perhaps to the point that we’ll even take the word digital out of the name. We are honored to back what we believe are two of the most innovative companies in the space, DRAUP and Tribute Brand.

DRAUP operates under the belief that financial returns form the foundation of a new ecosystem, and is focused on three key value propositions: a marketplace to buy the best of digitally-native clothing, a space to show and wear the digital clothes you buy, and routes to make money from your digital fashion (rent-to-earn, wear-to-earn, etc.). DRAUP is led by Dani Loftus of This Outfit Does Not Exist, a platform powering the shift towards digital fashion through education, exploration, and exhibit. We are thrilled to be on board for the journey. If you are interested in learning more or potentially joining the team, DRAUP is hiring! Get in touch with Dani here.

Tribute Brand launched in April 2020 and has quickly emerged as a leader in the global digital fashion market, selling out their drops and partnering with luxury fashion houses like Jean Paul Gaultier and Carolina Herrera along the way. Led by award-winning digital fashion creative Gala Marija Vrbanic, the Tribute Brand team has built a best-in-class digital fashion brand, with prior expertise across traditional fashion, CGI 3D modeling, blockchain, and UX design. Learn more about the fundraise here, and explore open roles (across engineering, design, research, and community) here.

Digital identities are an extension of our self-expression. In the future, they will be our most valuable assets. We are delighted to support this thesis and back both DRAUP and Tribute Brand as they push the fashion world to new limits.

“The internet is the new house of fashion.” — Donatella Versace

TCG Crypto is an investor in DRAUP and Tribute Brand. None of the information discussed herein is intended to be, or should be construed as financial advice, or an offer to sell or a solicitation of an offer to buy an interest in any security.

My favorite example of linguistic relativity is in the movie Arrival, where (spoiler alert!) linguistics professor Louise Banks is tasked with working with the military to communicate with aliens that have landed on Earth. Through regular “meetings” with two of the aliens, she begins to compile a record of the aliens’ written language. Louise learns that their language moves in circles, with each sentence lacking a clearly defined beginning or end. Interestingly enough, the aliens perceive time in a similar manner: to them, it was circular.

Louise works to decode the aliens’ language and, overtime, starts to have visions of the past and future. She, too, was beginning to perceive time as circular. Thinking in a different language altered Louise’s view of the world.

Arrival is just a movie, and the linguistic relativity hypothesis has garnered controversy since its origins in the early 20th century. But it’s been on my mind in recent months. I’ve watched a new “language” emerge for the new technologies and behaviors that exist in web3, and I’m not quite sure we’ve picked the right words. Today we’ll touch on the word “wallet.”

In my view, the word “wallet” falls short in a few different ways. Wallets in the traditional sense are static objects — they don’t change or adapt over time. They also don’t necessarily accumulate in value; wallets are purely storage facilities for capital, which, in turn, makes NFTs feel like capital assets. And if we want to get really pedantic, the word “wallet” often tricks people into thinking it holds actual funds as opposed to your keys.

It’s also important to consider how the purpose of a wallet has changed over the last few years. Up until recently, almost all wallets were built and designed around one thing: transactions. Many wallets are 3+ years old and were built solely for the purpose of buying, trading, and holding tokens. Since then, the purpose of the wallet has evolved. Now, we’re seeing more demand for wallets as a place to hold NFTs (see Genesis, Rainbow or Coinbase Wallet) and multimedia experiences (see Glass, DRAUP, and Altered State Machine). Put simply, wallets are becoming a place where people want to spend time, and there are more use cases today than ever before. Existing wallets will not (and, candidly, cannot) adapt to this new preference in behavior.

“Right now, the most common collection spaces take the form of “wallets” — blockchain based repositories, where owned items can be viewed as static images. These wallets are of little use to Digital Fashion collectors, as garments are neither shown off on a model, nor able to be curated and filtered.

This is like owning an haute couture dress but only being able to display it crammed in your wardrobe next to some Primark jeans, your high school Pokemon cards, and some old toys.” — Dani Loftus

When we think about how wallets — and what we call them — might continue to evolve, we can look to the factors that drove user adoption for previous wallets that reached mass scale. As a case study, MetaMask had 545,000 MAUs in July 2020. This shot up to over 10M by August 2021, driven by a surge of interest in “DeFi Summer,” where yield farming acted as a hook for consumers. At that time, it was an obvious choice for consumers to use MetaMask to take advantage of DeFi yields, as MetaMask was far more accessible (widely supported) than any competitor.

We can draw similarities between this example and the web3 ecosystem today. Supply of NFT projects, new yield farming opportunities, and social web3 platforms are all at an all-time high and only growing. Legacy wallets will initially consume new demand, but as the variety of applications, use cases, and behaviors expands, users (and developers) will need integrated, verticalized wallets that are more dynamic/supportive of leveraging on-chain provenance and transporting your digital identity across apps & chains. If this hypothesis is true, I expect to see an emergence of embedded wallets for different verticals or themes, each with their own terminology to onboard new users. Perhaps your digital fashion will be stored in a wardrobe, and you’ll show off your music NFTs by way of a discography. My friend Zach once encouraged me to think of wallets as the web3 equivalent of your email inbox. The user experience will suffer if we don’t have verticalized wallets for different consumer behaviors (trading, art, gaming, fashion, music, etc.), or at least an in-wallet search tool to sort NFTs accordingly.

My talented friend & fellow investor Jay Drain said it best: “Right now, crypto wallets look very much like inventories… in the future they will more clearly represent our digital identities by making them composable across the web.” I recommend you check out his full piece here.

To use language as a mode for coming to terms with our surroundings is to accept that our language structures our experience of the world. Perhaps this — inquiring into our own linguistically-induced blind spots — is what’s really in a name, after all.

Related: Do we see reality as it is?

Thank you to D’Arcy Coolican, Zach Davidson, Jarrod Dicker, Brandon Jacoby, Dani Loftus, Sean Thielen-Esparza, Zach Terrell, and many others for informing my thinking on this piece. If this piece resonated with you (or if you disagree!), I would love to hear from you. You can reach me via Twitter DMs.

In 2013, media & technology analyst Benedict Evans presented “Mobile is eating the world,” looking at how the unprecedented scale of mobile was beginning to change the Internet and the economy at large. At the time,56% of American adults owned a smartphone(compare that toover 85% today). It was impossible to imagine what was to come in the next decade; as I wrote in anearlier piece, technological innovations often emerge when it seems we need them least.

Evans’ thinking was prescient. He knew that with each wave of tech (railways, software, mobile… dare I say, web3) comes new businesses. And so it came as no surprise when we saw the rise of mobile-native innovations beginning right around the time Evans gave his presentation: Uber in 2009, Snap in 2011, Lyft in 2012, DoorDash in 2013… the list goes on.

Mobile was a platform shift — a paradigm shift in how the Internet worked. It increased scale and consumer sophistication, making applications 10x easier to use. Unlike desktop computers, phones were… personal. You could take them anywhere, access them without friction, and do just about anything: make a call, take a photo, find a location, submit a payment, listen to a song, or browse an app store. Smartphones were inherently social, too, unlike the desktop web. Apps could tap into a smartphone’s address book for a ready-made social graph; they could import photos from a user’s camera roll, or easily grab the user’s coordinates for location-based networking.

This will help put it into perspective: in 1999, 80 billion consumer photos were taken on film. In 2014 — just in that year alone — 800 billion photos were shared on social networks. Suddenly, everyone was a photographer. Smartphones represented a new generation of computing. But they also represented a new generation of users: the birth of the casual user, where anybody could be a part.

Today, web3 is largely web-native. There are almost no widely used mobile-native web3 apps. As Packy McCormick writes, “If web3 is going to be as big as the Internet, which has 4.66 billion users, it’s only penetrated less than 1% of the market.” I believe, if we are to get there, we will first see the emergence of mobile-native web3 applications to shepherd in the casual consumer.

So what mobile-native web3 user experiences might come about? My guess is as good as anyone’s, but a few that come to mind include:

• Geolocated NFTs, like Mirage or Dropverse. I expect to see the birth of new location-based social graphs here, almost like a Zenly for NFTs. Superlocal is working on an interesting version of this.

• Augmented reality web3 games, like Jadu.

• On that note, anything involving augmented reality and NFTs (I envision a world where we bring our NFTs into videos on Snapchat, TikTok, and Instagram… something like this giant sexy Shrek trend. But please don’t quote me on that).

• Social web3 wallets, like Genesis or Family.

• Highly visual “loot bags” and galleries for your NFTs, like Surreal and Cyber.

The biggest obstacle for web3 mobile will be Google and Apple continuing to rent-seek any in-app transactions that happen on mobile-native platforms. I see signs of Apple opening up here (a little!) but the landscape is continuing to evolve. (Note: It’s also precisely why I’m excited about something like ethOS, which aims to be the first native mobile operating system for Ethereum: permissionless by design with decentralized browsing, a dApp store, and robust wallet support. I try to watch this project closely and I recommend you read the whitepaper here. Perhaps more on this in another piece.)

My favorite takeaway from Evans’ presentation is that when tech is fully adopted, it disappears. You can test this theory with just about any technological innovation. Below, I tested it with the words railroads, computer, software, and mobile, looking up the frequencies of each word in the Google Books corpus from 1900 until today:

You can see each word undergoes some form of a bell curve, with interest peaking at a certain moment in time and then dropping from there. At a certain point, the word essentially… disappears. Evans is right. Now, when we test the theory with the words web3 and crypto from 2018 until today*:*

There’s a long way to go until we get to any semblance of a bell curve like the ones we see in the graph above. We aren’t anywhere near full adoption. I believe mobile-native applications will help to get us there.

If you are building in the space or thinking about what the future of web3 mobile might look like, I’d love to chat. As always, my DMs are open.