The Big Shift fireside chat with Dan Romero and Fred Wilson

hey before you do that i wanna say two things yeah one i used two mini apps this morning and both were really awesome the first one is where you at y a w y a t yep it's you know i've used swarm for fifteen plus years and so that's a very natural thing for me to wanna do is to check-in and doing it in the context of like a social network that already exists is amazing so props to whoever built that it's a great app and then i met a woman upstairs in the green room adrienne i think her name is who built an app yesterday at the hackathon that does something that i personally love to do which is cross post to both zora and farcaster images right so i took a a picture of the run a show and i posted it on her app and it went to both zora and farcaster and i'm getting engagement on both networks and it's awesome

yeah i coined it yeah

little wonkiness because i use a different wallet at zuora than farcaster and so that'll have to all get sorted and you know hopefully you and all the wallet folks will figure that out but i think that's a solvable problem

are we gonna have a web four

out exactly

right

all at

my partner brad led led the tumblr investment but we worked on that together yeah we did all three at the same time

i think a bunch of things came together blogging had existed for a long time going back to maybe even the late nineties but certainly by 02/2002 '2 thousand '3 people were blogging and facebook had come along and and linkedin had come along and so the concept of social networking was there and so i feel like founders were starting to realize that social was like a fabric you could build on it wasn't necessarily a thing into itself and i think mark pincus with zynga was maybe you know the first one to really see it and i'd known mark for fifteen years by the time we made our zynga investment and so i think it's mostly that developers founders developers all of a sudden saw social as the new infrastructure and quickly things were getting built tumblr was built by two people i mean for three years i think it was two people yeah and you know i think this is what many apps you know can do too like one person could build a killer business with a mini app never have to hire anybody else because you're building on top of social infrastructure of course the famous problem is that a lot of these social infrastructure companies freaked out and pulled back their apis and you know that whole thing came tumbling down but we can do it again

yes

certainly to get going a % marketing cannot make a bad product good i think there comes a time when a great product can leverage marketing and i'm fine with that but i don't think you can use you shouldn't use marketing to get to escape velocity and good products don't need it and i still think that's true

do

i think platforms don't intend necessarily to do that to developers they ultimately feel compelled to do it like forces compel the leaders of those companies to do those things and that's what i learned at both zynga and at twitter it wasn't that facebook didn't like zynga they loved zynga but like they had issues with zynga that the way zynga was they were misaligned basically and that's also true even more famously with twitter bill gross bought three twitter clients in the span of two months and was gonna fork twitter and twitter's like fuck that and that's what caused them to yank the api so you know it's it's market forces sometimes force platforms to do this and that's why i really believe in crypto as the way to fix that because then we have shared economics around shared tokens and we don't have to necessarily be fighting each other

you know for sure the mobile phone was sort of the end of tumblr i mean it still exists but its glory days were over when people started using mobile social networks like instagram and tiktok and and other substack whatever and

i don't know whether it was tumblr's inability to get to mobile quickly enough they took way too long to do that but i also think that certainly with images and videos if you're taking the images and videos on your phone then the app you wanna share them should be mobile first mobile native and so a web thing becoming the mobile thing was hard facebook did it so it's not impossible but you know they i think tumblr didn't see the existential threat as clearly as they should have for sure

it didn't work that was my idea i was yeah

work i mean the idea was like one login and you know maybe you know a shared infrastructure but different client experiences that were all kind of integrated around a single constellation but did different things and i can't really think of any anybody who's made that work uber has the uber app and the uber eats app

oh they've merged it now yeah

yeah but facebook bought instagram facebook brought whatsapp so so yeah they've made it work but they didn't they didn't unbundle facebook yeah

i think maybe web three we we can get back there i mean you were can i say the thing you told me last night about mini apps becoming full blown apps

how to can i say the thing i just said yeah yeah yeah the point that dan was making last night which i love is that mini apps are where you get product market fit and if you build something that's amazing then you build a mobile app for your hardcore users and your less hardcore users will still use the mini app and they'll all be an integrated experience and so if i'm doing stuff on the on the mobile app it shows up in in the mini app and it's all it's all great right and i love that idea and so in that world we would have an app constellation

you know i think that forecaster in particular is is giving developers all the things they need because you need a single login and you need a single wallet i think to really make it work which is the problem i had with the the image posting mini app was just that two different wallets on zuora and forecaster i do think that the people out there in the audience who are making wallets like turnkey and privy and coinbase and metamask and and phantom and whoever they gotta figure this out they gotta let me you know say these are all the same goddamn thing you know

and and soundcloud is doing great i mean it's almost 500,000,000 in revenue highly profitable growing 20% year over year you know new creators are joining soundcloud every single day and i think more well as more people are using ai to become musicians in a way that they couldn't in the past i think you know very bright future for that company but they faced a moment in 02/2013 where the music industry said to them you're either with us or you're against us and if you're against us then we're gonna naps through you and if you're with us you gotta sign the same deal with us that spotify and apple and everybody else has signed and it was a it was a horrible decision we ultimately did the latter we maybe chickened out we we did the latter and then we were forced into a business model that we really weren't well suited to do because we were a ugc thing now youtube sold to google and google was able to say to the television and film industry hey we're gonna do it differently and they got away with it but little old soundcloud couldn't do that so you know i i really regret it and there's one more thing about that because for founders in the audience who need to have courage in the moment i'll tell you a story at the very time that we chickened out post malone lil yachty billie eilish were all breaking on soundcloud right then and what we could have fucking done was signed them to soundcloud could have said to the music you know we are the music industry fuck you and we didn't do it we chickened out and those artists got signed by the same people who screwed us so you know that's the thing it's like the moment you think you're screwed you might actually have the crown jewels and you don't even know it

it's called the slow hunch yep

we didn't see it you know again so ironic the timing is two stories back to back and not intentional where timing is so ironic at the very time that the twitter board was making that decision satoshi had published the white paper and had we known that what satoshi was laying out in that white paper was a path to monetize protocols in a way that everybody could share together in the value maybe we could have done that but the timing was off like it just it wasn't obvious really to me anyway until ethereum came along i didn't even get that i mean my partner albert kept saying bitcoin's a protocol bitcoin's a protocol i'm like nope howard bitcoin's money bitcoin's money and i still think bitcoin's maybe more money than a protocol but ethereum was a protocol for sure and then everything that was built after that i think is more or less a protocol and so we didn't see it we didn't do it and you know that's why i'm so so so excited to be an investor and farcaster because i think you can do for the world what twitter was unable to do and then twitter ends up in the hands of a megalomaniac egomaniac and

yeah i went through a really you know i went through like a slump you know and it was 02/2009 to 02/2012 i didn't invest in much of anything you know i i got out of social too early i i i don't know like you know i i i do have a bad habit of of getting in too early and out too early and i just was sort of like not i i i got into social in 02/2003 when i started blogging and i was all in for like six seven years all that i thought about all i invested in and i just got kinda tired of it and and i just was sort of looking for the next thing and looking for the next thing and i didn't see it i didn't see it i didn't see it and then i read the white paper and i was just like that's the next thing and then it took me a year to find brian and this was i met brian before fred joined

and i just i knew the minute i met him i knew i was like this is what i've been looking for but i got a funny story about this about a year later an analyst showed up at usv named joel monegro and he's like fred why did you invest in coinbase when you could have just bought bitcoin and i was like well you know we don't do that like we invest in startups we invest in companies you know our limited partners they could go buy bitcoin but they couldn't invest in coinbase so that's what we do for them he's like yeah but they would never have bought bitcoin like you should have just bought bitcoin so we made a little friendly wager that when coinbase went public it would be worth more than the bitcoin that we had bought on the same day so after coinbase went public joel and i compared it and it was almost exactly the same but then i said to joel see and he's like yeah but you had all the management changes all the fundraising all the you know sec shit and we had none of that so

i said today to a friend of mine on text i said

hold on i'm gonna read it to you it's very pithy and and pretty memorable and i thought it was pretty good i said

big wins in vc come from believing before anyone else and believing after everyone else moves on no after everyone moves on no there's no else in there and this is this is something i really really believe in you have to ride out the cycles if you you know when the internet blew up in february and 02/2001 we had a portfolio of about 50 companies 10 of them went on to be really big important companies 40 of them either went under or got sold for nothing or not much but 10 of them went on to be really really valuable companies and and you know if you went and looked at that portfolio now and you saw mercadolibre and comscore and a few others and then you'd be like oh yeah those are good companies of course they made it through but at the time you know we're like everything's falling to shit but like the good ones get through and that's what i so respect with brian and fred because the first cycle that they went through in like maybe '13 or '14 or '15 when did you show up '14 and were we in were we in a down cycle

but they hung hung in there and all the other competitors went away yep all of them and then in '17 when ethereum went nuts we were the only game in town started printing money

yeah so it just like i i just feel like you just gotta have conviction you gotta ride out the cycles you gotta be smart the other thing that i think brian and fred did so well was that they always raised in the bolt and then held on to the money in the bear

i have been interrogated in the basement of the sec building in washington dc with no windows and they wouldn't give me water

i it's the wild west and you know i really think that it's like it just you we just gotta go for it right here right now we're gonna have a window you know at least four years but at least two for sure and i think probably four because i don't think congress is gonna undo anything that gets done in the next two years where we're we can finally do all the things that we wanted to do in crypto but we haven't done before regulatory reasons if there are business reasons we shouldn't do it then for sure but like regulatory reasons have held back so many founders from doing so many obvious things and we now have a moment to just go do those things i also think we're gonna see a lot of tradfi become defi over the next four years you know i think defi is all fi right like in ten years it's it's it's gonna and i realize this is probably not a defi crowd so much but i just think and we were talking at dinner last night about you know what tether invented over a decade ago just taking a bunch of traditional things like cash and treasuries wrapping them in something tokenizing it and putting it out there so it can move on chain like we can do that to stocks we can do that to bonds we can do that to anything and and i i think we all know that once it runs on crypto rails it's gonna be better better better better better and i just think that there's no doubt in my mind that the government's gonna make all that possible in the next four years so i think it's a great time for crypto and it's a it's a time to just step on the gas and do all the things that your lawyers were telling you not to do for the last fifteen years

free is good do you still believe that with crypto because you know you're pretty passionate about you know people saying oh you know well i i really i really like the way luis von ahn the founder of duolingo thinks about this like the mission of his company is to make language learning free for everybody they charge and they make i think they're doing over a billion dollars in revenue almost certain that they are maybe more but but free is a big part of the value prop and and that's not even really you know a network effects business in network effects business i think free is essential and free doesn't mean don't monetize free means it's free to use and if you never wanna pay you can participate and then you monetize you know through other mechanisms and i think crypto is is an even more powerful way to to do that the word freemium was not coined by me although a lot of people give me credit i wrote a blog post where i in 02/2005 where i said there's this emerging business model where you give it away for free and then you monetize it with you know premium features and i don't know what to call it and one of the commenters said call it freemium i'm like absolutely that's what we're calling it and that's what we call it now and it's to me it's a great business model because it because because it really allows you to get the network effects growing and keep everybody can can play in inside the community and you know that's what you got going on farcaster yeah

courage of your convictions

you know i mean i really gotta give the guy credit he

when he believes something he believes it and if everyone's telling him no and he really believes it he's gonna do it and he's been right almost every time because you know when you're a leader right and you wanna do something and everyone in your company is telling you not to do it if you have some doubts then maybe you let the company convince you not to do it but if you if you know it's the right thing and you do it i think you're gonna be right more more often than not just because you wouldn't do it unless you really really were convinced it was the right thing and and i just watched him do that with management decisions i've watched him do that with like culture issues there's some famous you know things that have been written publicly about him in terms of how he wanted to change the culture of the company in the time it was very unpopular to do it and everyone told him no me included and he went ahead and did it and it was absolutely the right thing and now people look back and just like credit him as the one guy who had one person who had courage in a moment where nobody had courage and that's what i really respect about him do you agree

the i mean it's you know look you know he really believes in on chain and you know he runs a company that you could look at and say they're not really an on chain company right and yet you know he is just continuing to push the company on chain on chain on chain and there's a lot of people in the company that'll be like well we're making all this money off chain and we're making no money on chain and he's like on chain on chain on chain he's going to be right

yeah and

people are leaving crypto to work in ai like chris dixon told me oh it's terrible all the good founders are leaving crypto to go work in ai and i don't believe that to be true by the way there's lots of great founders right here in this audience who are who are as into crypto as ever so i don't believe that to be true but ai is definitely the shiny new object yeah %

yeah usv everybody's a generalist and at usv we have call it four areas that we're really excited about right now crypto energy bio and ai and robotics which i think is one thing some people would say it's two and our job is to invest across all those categories and we all do what i'm but i would say i'm more passionate about crypto than the other three but i have partners who are more more passionate about some of the other three than crypto but we're all passionate about all of them and for me crypto is also unlocked in some of these other categories and so i'm really interested in how crypto can help the energy transition how crypto can help with ai which i think there's a lot of things that we need to do in ai that we're gonna need crypto for so i i'm also really interested in in those intersections but you know crypto has is near and dear to my heart i just i don't know like i get crypto in a way that i natively instinctively that i that i don't necessarily get these other categories i have to work harder in the other categories crypto just comes to me like some people are good at tennis but you know suck at golf and some people you know are good at languages but not good at math crypto has just always come natural to me

well it's interesting to me that sam altman did both openai and worldcoin and i don't think it's an accident i think that if you work in ai one of the things you understand is that there still is a role for humans in a world that a lot of bots are gonna get created and like we we're gonna know when we're when we're dealing with a human versus a bot and we and we ultimately want humans to control the bots and so the idea and we'll see whether worldcoin is the right idea or if there's a better idea to you know proof of humanity but to me crypto is the only place that you're really ever gonna develop true trusted proof of humanity so that's to me is a big idea and one that i think ai makes even more important agents of course is you know you know one of the things that we we we have said at usv for over a decade is that one of the fundamental rights of humans is to be represented by a bot and you know that hasn't been conventional wisdom in fact all the big tech companies literally don't let you you know assign a bot to be able to engage in linkedin for you or engage in twitter for you or engage in in some other platform for you they block your bots and you know that's in my mind not right not fair and this is why we need you know protocols as opposed to platforms and so those are just a few of the ideas there's there's many out there i think you know we could if we had an hour and a whiteboard you and i could probably come up with 50 good ideas

well the big idea that we've been looking for at usv for fifteen years my partner brad who started usv with me has been championing this forever and ever which is your own personal data store a place where you control all your data and then you permission it out to the world but it's your data as opposed to facebook's data or instagram's or tiktok's data or twitter's data and we we've made a couple of bets in this area i'm not convinced yet that we've made the right bet in this area and maybe there's multiple right bets to make but i think we again we will need crypto to make that work and so that's an area that i'm pretty optimistic about and people should keep trying