Sorry for the segue but the rapid evolution of what is increasingly being described as Web 3 is an equally dramatic content shift.
Web 3 is a label describing a number of profound technology platform shifts. The shift from centralized portals with operating companies to decentralized platforms with tokens, and often no company. The shift from mere data to AI and automation on these platforms. The opening up of the “creator economy” to millions of creators.
Web 3 is complemented by Venture Capital changes that we have documented here. However, this week a slew of statements by VCs purporting to be “manifestos” (Index Ventures) or “agenda for the future internet” (Andreessen) seek to frame these changes in a broader context.
An interview with Azeem Azhar focuses on how unprepared Web 2 is for the new products of innovation. And MG Seigler of TechCrunch fame suggests that Facebook itself is dead, at least “living dead” and needs to morph or die for real. He agrees with my editorial last week that:
The problem with Facebook isn’t actually Facebook. It’s us. It’s human beings. The problem is that Facebook created the greatest tool ever to connect those human beings. And it has led to a world in which the local lunatic is now the global lunatic.
But my favorite section this week is the venture transformation section, and specifically three articles within it. John Luttig writes about the emergence of passive investing through index funds as a new alternative to picking single startups and suggests private companies will become the subject of indexing. I like it because that is essential to what I am doing at SignalRank Corp
Further evidence of institutional capital embracing indexing comes with the story about Blackrock investing in Inovia’s follow-on fund. $340m focused solely on follow-on rounds in 8-9 existing portfolio companies. Blackrock bought into a collection.
Finally, the story about venture capital firms morphing into investment banking-like organizations, focused on Andreessen Horowitz indicates that capital allocation is not a static model.
It is logical, then, that the most successful VC firms are slowly morphing into a new breed of investment banks — gatekeepers of the capital markets for tech startups and tech companies.
It is no coincidence, then, that indexing, a concept long confined to the stock market, is becoming more visible in venture capital (see John Luttig here
, and Tomasz Tunguz here
). Instead of chasing a few deals a year, just trust a large, established firm with your money and let it index it on the entire tech market! A traditional VC firm can’t do that, but an investment bank does.
The targets for indexing are spelled out in Wired Magazine’s article on the accelerating pace of unicorns being minted. All of this adds further clarification to the rise of large-scale investors like Tiger Global.
Finally, there is a lengthy section on Crypto. Scan the headlines to see the trends that make up a large part of Web 3.
See you back in Palo Alto next week. My context will return to normal. But tech will not. These changes are deep, fast, and profound.