#542: Chris Dixon and Naval Ravikant — The Wonders of Web3, How to Pick the Right Hill to Climb, Finding the Right Amount of Crypto Regulation, Friends with Benefits, and the Untapped Potential of NFTs

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Key Takeaways

  • “What the smartest people do on the weekend is what everyone else will be doing during the week in 10 years” – Chris Dixon
    • Getting tunnel-vision hill climbing can be very dangerous. Climbing up the corporate ladder is great and all but don’t lose your ability to get distracted, you never know what opportunity you will stumble on.
    • “Follow your natural intellectual curiosity, the best career of 2021 was to be JPEG collector” – Naval Ravikant
  • Web3 empowers a collective owned future over a corporate or government owned future
    • Web3 enables more opportunities to own and monetize your creativity than ever
    • We finally have private property on the internet; we can create owned digital scarcity
    • Composability is the compound interest of software – the open-source nature of web3 will allow for exponential growth
    • Web3 has gotten twisted into a political argument over centralized vs decentralized but the main utilitarian goal is to make the internet a better place for users and creators
  • “Web2 companies convinced you to give away your creations in exchange for little hearts, tell me how NFTs are the real scam?” – Chris Dixon
    • NFTs are the link that funnels value directly between the creator and the consumer
    • Disclaimer: If you bought Flickr before Pinterest in the early days, you would have been disappointed. Innovation takes time to develop value.
      • Buying NFTs can simply be a form of appreciation to the creator or an artifact of the community; it doesn’t need to be a transfer of monetary value
      • It’s still early, you may have missed one boat but you haven’t missed all the boats
  • “[Web3] is how America stays ahead, this is why we are investing so much in it” – Chris Dixon
    • Innovation is the best solution to national economic success and stability

Intro

  • Chris Dixon (@cdixon) is a general partner at venture investing firm Andreessen Horowitz & Naval Ravikant (@naval) is the co-founder of AngelList and a popular follow on Twitter where he gives his takes on technology, life, and the future to his 1.4 million followers. Tim, Chris, and Naval discuss what the frontier of innovation looks like as it relates to Web3, NFTs, and decentralization.
  • Host: Tim Ferriss (@tferriss)

Chris Dixon’s Philosophy Background

Frontier of Innovation

  • “What the smartest people do on the weekend is what everyone else will be doing during the week in 10 years” – Chris Dixon
    • Usually, ideas start as fringe ‘culty’ clubs. Why was personal computing being talked about in Steve Jobs’ garage and not at IBM?
      • A lot of ideas stay as hobbies and don’t catch the exponential mainstream
      • Businesses of scale plan on the execution of incremental improvements, not disruptive innovations
  • Hill Climbing: an algorithm that keeps building on itself to continue making incremental improvements
    • Chris argues people apply this too literally in their careers, they end up at the top of the hill they didn’t even want to climb
    • Allow randomness (exploration) into your life so you’re always climbing the right hill at the right time
      • “Follow your natural intellectual curiosity, the best career of 2021 was to be JPEG collector” – Naval Ravikant
  • “What is the current definition of the frontier? It’s on the internet within web3 and crypto” – Naval Ravikant
    • Open source, portable data, user privacy, decentralization, accessibility, community-owned and generated networks are all part of this frontier landscape
  • Hashcash, which is the algorithm for Bitcoin mining, was originally created to fight internet and email spam
    • If you can make $100 off of sending 1 million emails for free, why wouldn’t you do that?
    • Hashcash defined ‘stored labor‘ which is the required computation that gives credibility to your actions
    • Byzantine Generals Problem: How do you get people to coordinate and trust each other without knowing each other?
    • Hashcash was a form of proof-of-work that created communal network trust
      • This is the power of Web3

The Evolution of the Web

  • Web1
    • Dominated by protocols (http), built on top of the web, you controlled your platforms
    • Read-only
  • Web2
    • You created content under a closed network using a social media platform
    • Read & write under centralized ownership
  • Web3
    • Internet owned by builders and users, orchestrated with tokens
    • Read & write & own
    • Tokens are a mechanism to give value and control to the user rather than a centralized company
      • The tokens are self-marketing which is why it will eventually beat web2
    • Web3 has gotten twisted to be a political argument over centralized vs decentralized but the main utilitarian goal is to make the internet a better place for users and creators

Introduction to Web3

  • We finally have private property on the internet, we can create owned digital scarcity
  • Applications have received the majority of economic value while the creators have received the scraps
  • Benefits of Web3:
    • Your data will be secured with private keys, where we can give selective access to our data to whom we choose
    • Contributors own the platform rather than corporations
    • Defeats the corporate selfish use of leverage on copyright and intellectual property
      • You want people to recompose your content!
    • The codebase is open-source, developers can co-opt creation in a way truly best suited for users
      • Web3 is composable – use one piece of an application to help build another
      • You only solve each problem once and build on top of it
  • Potential challenges of Web3:
    • Security and storage – functioning correctly as your own bank
    • Maintaining your anonymity
    • Usability
    • Messaging of utility
  • “[Web3] is how America stays ahead, this is why we are investing so much in it” – Chris Dixon
    • Devaluing the dollar has been the only response to the loss of innovation
    • “If aliens invaded the earth, we would cut interest rates” – Naval Ravikant

NFTs

  • Anything that is in fashion can hold value through a community context
    • People are attaching their identity to their NFTs, large sentimental value
  • “Web2 companies convinced you to give away your creations in exchange for little hearts, tell me how NFTs are the real scam?” – Chris Dixon
    • NFTs allow you to tokenize your value as a creator
    • The subscription model is becoming re-popularized over the centralized advertising model
  • NFTs are the core concept of ownership of the internet, there will be a broad utility
    • “We used to operate on a renting thiefdom design, and we’ve broken opened a 20-year creative run” – Chris Dixon
  • Creators can provide first access to products or exclusive services through the ownership of an NFT for accessibility
    • NFTs are the link that funnels value directly between the creator and the consumer
  • NFTs are creating a vibrant digital economy within the gaming community
    • Games like League of Legends have monetized off of aesthetic add-ons, nothing that increased performance, a status flex. These virtual good purchases were being bought from the company, not individuals.
    • Axie Infinity: by playing the game, you create and improve NFTs which can be purchased by other players on a marketplace (like eBay) as an add-on
      • Yield Game Guilds (YGG): play-to-earn gaming, opportunity to get loaned access to a platform like Axie Infinity to participate in the marketplace without paying the entrance fee
  • Disclaimer: If you bought Flickr before Pinterest in the early days, you would have been disappointed. Innovation takes time to develop value.
    • Buying NFTs can simply be a form of appreciation to the creator or an artifact of the community; it need not be a transfer of monetary value
    • It’s still early, you may have missed one boat, but you haven’t missed all the boats

Skeuomorphism

  • Skeuomorphism: a concept that applies aesthetic designs to innovations to make them feel more familiar – Steve Jobs coined this concept
    • For example, the first automobile mimicked the horse and buggy
  • But the native internet has taken over, people who use technology are comfortable embracing new ideas
    • There is no point in packaging blockchain as a new ‘supply chain management’ tool
    • Familiar products (skeuomorphism) may work, but disruptive tech is what is going to last over the next 10 years
      • You don’t need to replace products, people can adapt very quickly to the native functionality of products
      • But it’s usually defined in retrospect, it’s hard to tell when you’re in a skeuomorphic period of innovation

Regulation

  • Regulators regulate through policy or enforcement. We’ve only seen enforcement on Web3 so far because no one knows what to do
    • Policy needs clarity and goals need to be aligned
  • There needs to be a balance from the SEC to crack down on obvious scams but also let true innovations naturally grow
    • Fairness must be defined before this is possible
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Notes By Drew Waterstreet

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