Web3 for TradBiz — Web3 and Crypto Foundations (2 of 14)
Why embrace Web3 now?
Web3 opportunities can improve investment performance, innovate business models, enhance careers, future-proof capabilities, and even change the world
We’re frequently asked by TradBiz executives and investors why they should invest time and effort to address Web3 now, especially given the 2022 downturn in asset values often referred to as crypto winter by the Web3 community. Our answer is that we believe Web3 innovation is inevitable, and that learning about, assessing and addressing Web3 opportunities can create value across multiple dimensions, including improving investment performance, innovating traditional business models, enhancing professional careers, futureproofing yourself and organization, and even changing the world. If you’re interested in applying Web3 to your business, the crypto winter provides you with the time and space to explore and act upon Web3 developments, enabling you and your organization to be positioned when crypto markets recover.
Adding crypto and other Web3 assets to investment portfolios provides the potential for improving performance. While the 2022 bear market has seen leading cryptoasset prices decline significantly from 2021 highs, these declines came off tremendous appreciation in leading cryptoasset values over the past five years. For example, while the S&P 500 returned a solid 22% annual growth in the five-year period ending December 2021, Bitcoin’s value grew at an impressive 164% annually, while Ethereum surged at an incredible 364% annual growth rate.¹ We’re not recommending that you become a Web3 degen and ape² your entire portfolio into crypto-based investments. However, since we are still early in Web3 adoption, cryptoassets may have the potential to outperform other asset classes in the foreseeable future. If you haven’t already started investing in cryptoassets, consider allocating a small percentage of your portfolio to Web3-related investments. Even a small two-to-five percent allocation has the potential to increase the risk-adjusted returns of your overall portfolio over time. This isn’t investment advice — we recommend that you do your research, find knowledgeable advisors that you trust, invest in reputable established projects, and never invest more than you can afford to lose. We discuss Web3 investment opportunities in more detail later in this series.
Innovate traditional business models by incorporating Web3 technologies, ecosystems, and communities. Companies are already leveraging Web3 innovations to expand markets served, establish deeper customer relationships, develop new value propositions, automate business processes, attract and retain talent, improve supply chain efficiencies, and improve partner relationships. These translate into revenue growth from new and enhanced Web3-enabled offerings, as well as reduced operating expenses and improved capital efficiencies. You can explore these in TradBiz market and business model implications.
Advance careers, improve work-life balance, and increase rewards by developing Web3 skills. There has perhaps been no better time to develop new skills in the past decade, as Web3-focused projects and organizations seek to attract scarce talent. There is already a meaningful migration of Web3 talent from traditional technology firms as ambitious professionals set their sights on the next opportunities. In fact, Web3 software developers are amongst the most sought-after employees in today’s markets. Moreover, opportunities exist for Web3-fluent professionals across a broad range of functions, including marketing, community engagement, finance, project management, investing, creative development, and more. Career prospects are not limited to traditional so-called W2 employment, but also include contributing to decentralized autonomous organizations (DAOs) instead of established companies, working from anywhere rather than physical offices, and even using pseudonymous identities where individuals are compensated for value delivered rather than who they are or where they went to school. Learn more in Decentralized autonomous organizations (DAOs).
Futureproof yourself and your organization from Web3 disruptions that could disintermediate you or your company. If the above reasons aren’t compelling enough, consider the need to futureproof yourself and your organizations from the potential disruptions that the Web3 paradigm is enabling. Just like Jeff Bezos frequently stated, “Your margin is my opportunity” when explaining Amazon’s low-price, low-margin strategy to establish market share,³ Andreessen-Horowitz’s Chris Dixon describes the transition to Web3 with an updated, “Your take rate is my opportunity.”⁴ Similar to how Amazon disrupted so many markets, Web3 ecosystems are poised to do the same by providing compelling value propositions in which users gain most of the economic benefits of participating in decentralized, open-source ecosystems, rather than profits accruing to centralized, proprietary-technology companies. We examine some of the ways Web3 is disrupting markets in Web3 market and business model implications for TradBiz.
Change the world by solving problems that couldn’t be solved before. The most compelling use cases and value propositions during the Web3 transition will come from teams developing ecosystems that solve problems that simply couldn’t be addressed previously with TradBiz models. Opportunities abound to bootstrap new communities using token network effects, innovate never-seen-before decentralized finance (DeFi) solutions, reward users with participate-to-earn (P2E) models, monetize relationships between content creators and fans, exit startup projects to community ownership rather than via acquisitions or initial public offerings, and many more. If you’re passionate about addressing market needs that have not yet been solved, then maybe Web3 provides the building blocks you’re looking for to change the world. To begin to develop intuition about the broad range of potential problem-solving opportunities, check out the nearly 100 use cases identified in Web3 use case categories.
There are many compelling reasons for TradBiz executives and investors to embrace Web3 now. If any of the above dimensions are compelling — improve investment performance, innovate TradBiz models, enhance professional careers, futureproof yourself and organization, and change the world — then read on as we explore the Inevitable Web3 future.
Monchester Macapagal and Kris Caigas of AcceleratingBiz contributed significantly to the research, writing, and production of this series.
Explore other Web3 for TradBiz insights and resources at acceleratingbiz.com.
Click on the links below to progress through the Web3 for TradBiz series:
[1] Web3 for TradBiz introduction
Web3 and crypto foundations
[2] Why embrace Web3 now
[3] Inevitable Web3 future
[4] Crypto and Web3 basics
[5] Advanced Web3 topics
[6] Using crypto wallets
Use cases and value propositions
[7] Web3 use case categories
[8] Decentralized finance (DeFi)
[9] Non-fungible tokens (NFTs) and the Metaverse
[10] Decentralized autonomous organizations (DAOs)
Web3 implications and opportunities
[11] Web3 impact on TradBiz market and business models
[12] Emerging Web3 investment opportunities
[13] Evidence of mainstream Web3 adoption
End notes:
¹ Bitcoin and Ether prices were extracted from Coinmarketcap.com, while S&P500 prices came from Yahoo! Finance. Bitcoin’s price in December 31, 2016 was at $955.48, and by December 31, 2017, it reached US$46,304.45. Ether’s prices for the same period went up from $7.9757 to $3,682.63. S&P500 prices, meanwhile, increased from $2,238.83 to $4,941.11 during the same period.
² Degen definition: Web3 slang referring to individuals involved in making risky bets, and more broadly to anyone involved in the crypto and decentralized finance space. Ape definition: Web3 slang for someone investing heavily into a crypto token, NFT, other digital asset or stock, often without having much knowledge about the asset.
³ Adam Lashinsky, “Amazon’s Jeff Bezos: The Ultimate Disrupter,” Fortune, accessed April 18, 2022, https://fortune.com/2012/11/16/amazons-jeff-bezos-the-ultimate-disrupter/.
⁴ Chris Dixon (@cdixon), “1/ Topic: Going from Web 2 to Web 3 — “Your take rate is my opportunity, ” Twitter, August 11, 2021, https://twitter.com/cdixon/status/1425645842552086532.
