The Age of Hyper-fans, Part 3: Marcus Aurelius Is So Passé: Web3, Community, and Trust
Marcus Aurelius intuited that the path to happiness involved focussing on things under one’s control:
“Today I escaped from anxiety. Or no, I discarded it, because it was within me, in my own perceptions; not outside.”
Darrow, the young hero of Red Rising by Pierce Brown, a dystopia set in a futuristic Roman Empire, would disagree. What is outside is an unfair system that assigns a poor few to dangerous mining jobs to finance the lives of Roman-inspired ruling classes that live off the profits and fight each other to pass the time. He devises to shut the whole thing down. And this is only one of many examples of heroes fighting against the lack of control imposed on them by unfair rules and systems.
In this series of books that contains one of the best villains of modern literature (in its second trilogy), the ruling class argues that a world without castes is troubled and unstable; and indeed, the world of Red Rising very much is. Darrow — and the reader — thinks trouble is better than unfairness.
Consultants love to dwell on “Gen-Z”, the generation of young adults born after 1998, who, reportedly, are the keenest on corporate values, meaningfulness and independence at work, and work-life balance. They are frequently referred to as short-sighted. In short, something akin to what Marcus Aurelius would have called an Epicurian.
This is not because they are in fundamentally worse circumstances from their older peers. This is because, as they join increasingly large organisations in junior positions, they feel the lack of agency the keenest out of all the other age classes. It is also because the cultural relationships with family has changed, coinciding with the entry of women in the workforce — the concept of “Work Life Balance” was brought up by working mothers in the UK in the 1960s-70s.
But our overprocessed society yields young adults that feel more and more alone in estranged cities where they do not know their neighbours, a transition well progressed since the staple demonstration in Bowling Alone. They are also subject to working schedules that are still based on the framework democratised by Henry Ford in 1926–9am to 5pm (“9–5”) jobs, five days a week (a concept originated by Robert Owen, a socialist, in 1817, with the idea of preserving a fixed amount of time for leisure). Workers are expected to care their children, aging parents, answer emails and commute, all the while sticking to inflexible hours. Anxiety, in that context, is not that easy to discard.
Self-employment is a solution. In a 2017 survey, 43% of respondents indicated they were leaving their 9–5 jobs to find “more control” over their career.
It is also not infrequent for start-ups to market themselves as ways to take back control — of your finances, your mortgage, your time, ingredients in your cat’s food. An alternative argument is to present your company as a “stress-free” alternative to commonly stressful problems — all the above that people perceive they’ve lost control of. This is particularly obvious in Fintech, where “staying in control” of finances is a key argument for a better app or service than currently offered by banks. It allows people to save, in a world where, in the UK, 46% of adults say they will be unable to save anything at all in the next twelve months.
People’s perception of banks in general is poor, regardless of one’s own experience with banks. A 2017 survey found that while Americans were satisfied with their own banking services (90% positive), their perception of “Wall Street banks” in general was only 21% favourable. Even Mortgage Lenders performed better in general, with a 31% positive view.
Banking regulators were not very popular either. 75% of survey respondents said that they believed financial regulators cared more about their own jobs and ambitions than the well-being of Americans.
Bankers themselves do not have a much better reputation — 64% believe that Wall Street bankers “get paid huge amounts of money” for “essentially tricking people.” Not a good look!
In Europe, the numbers look even bleaker. In 2017, the level of confidence in banks in Germany, France and Italy was half that of the US. Even in the UK, which has higher levels of trust overall, only 36% of customers trusted banks to have their customers’ best interests in mind.
That is fair! From the point of view of customers, banks often charge high fees with no explanation and often don’t live up to customer service engagements when times are hard.
The decline of trust in banks also correlates with what is probably one of the biggest waves of mergers in history. While the number of banks in the US stayed stable from 1950 to the mid-1980s, that number has dropped by a staggering 71% in less than forty years. The same occurred in Europe.
To a large extent, the foray into Web3 — a vision of the web where blockchain-based systems enable the decentralisation of user data and finances — of the past two years was largely an answer to the growing sense of disconnection and unease experienced by unhappy customers of the financial system.
Web3 reconciled the need for community and agency in the financial system. Because the traditional financial system did not offer crypto-currency products, a parallel ecosystem developed around blockchain-based technologies. Non-fungible tokens (NFTs) proposed a new concept of internet ownership, while tokens (share-like securities that gave ownership or voting rights to holders) enabled participation in various online goods or services. Because these were new products, they required high community engagement. In fact, thinking about Web3 without community makes no sense. People who were engaged in Web3 communities tended to be intense about it, too. Web3, to some extent, could be described as a non-fictional hyper-fandom.
The issue with Web3 is that it always stayed, first and foremost, a financial ecosystem, where you often would hear more about complex tokenomics than a value proposition.
All is not lost for blockchain: interestingly, banks are far more likely to be interested in Web3 than regular people.
A recent survey found that only 8% of people around the world were very familiar with Web3. Around the world in 2023, estimates put the number of cryptocurrency owners at about 420 million people. As of June 2023, ChatGPT had more than 100 million users — which means it reached a quarter of cryptocurrency’s current penetration, built over years, in a bit more than six months.
Meanwhile, banks have all published about how Web3 can transform their business, and (as of 2023), about 50% of banks had explored or tested a blockchain use case (less than 20% had launched proper developments). That is despite a much lower fraction of banks (10%) seeing any relevance in decentralised technologies for their business. In other words: banks haven’t found a blockchain use case; but they were quite keen to try.
What would it take for blockchain to crack mass adoption?
There is no community without (1) a universe that users share and (2) trust. As Matt Levine, Bloomberg’s best writer for everything banking-related, puts it:
“Saying that modern life is lived in databases means, most of all, that modern life involves a lot of trust.”
As Web3 companies discovered, building trust in a financial system has taken our traditional stock market decades of trial-and-error, corporate governance scandals, elaborate stock-issuance mechanisms (think of the so-called “poison pills”), hostile takeovers and corporate raiders.
The SEC says tokens are securities — implying all that happened in the stock market can occur in the token market and regulation should therefore apply. No technology solves the issue of human greed. Regulation and the Criminal Code limit it.
Ultimately, most Web3 companies fail in their assumption that the lack of financial control is a customer pain point. It is not. It is a symptom for lack of agency, but there is no actual demand to manage everything oneself and vote in token-elections in all the services one uses. Most people are unwilling to understand complex financial mechanisms and most people do not vote at shareholders’ meetings. In fact, retail investors hardly ever vote.
That is because taking decisions is exhausting. In psychology, decision-fatigue (or ego depletion), is demonstrated to have negative consequences on individuals.
Robinhood investors are not decision-making investors. They are, however, extremely social: they are participants. They meet on Reddit, where they play out stories around stocks, take over roles, evangelise, convince, and argue. They play at investing as though it were a game. And it is — gambling is as old as time itself.
Companies have understood this — increasingly, they want to reach shareholders where they are — on social media. In turn, an array of startups offer product to facilitate understanding of corporate decisions (such as environmental impact), or better ways to vote. Robinhood acquired communication platform Say Technologies in 2021 — an unsurprising move for a company that touts that “Participation is Power”.
Defenders of Web3 are quick to say that, precisely, they enable community and encourage participation. This is a smart vision, and, it has some convincing arguments. But it suffers from an overtly elaborate financial proposition that does not answer the pain point: lack of agency.
That is because elaborate propositions require process, and more process is making lack of agency worse, not better (we elaborate on why in Part 4). In this regard, it is too clever by half.
Want to read more? Stay tuned for Part 4: Lannisters Always Pay their Debts: Reputation & Solving (Gen-Z) Talent Problems & the conclusion of parts 1–4.
