How We Got to web3

What you are missing about web3 and how innovation works

Feb 17, 2022

One of the simple pleasures I enjoyed in the time before COVID when I traveled regularly was to flip through the pages of Sky Mall magazine. There would be page after page of bizarre and impractical products. You could get a glow in the dark toilet seat, a giant fake rock, a beard hat, and even more esoteric and niche solutions to your non-existent needs.

That is what most novelty looks like. It looks more like a toy or fad rather than something that you would regularly use, much less something that would fundamentally change your life. Car phones were once like that, these massive boxes with batteries that took up half your trunk. It seemed thoroughly pointless. But what was nothing more than an extravagance of the rich back then is now an essential tool for everyone.

We are at that moment with web3. My first impressions of NFT's and communities like Bored Ape Yacht Club were the manifestations of people so bored and socially deprived from COVID that they created expensive JPEG's as a game. The incessant hype made it appear like some frothed up Ponzi scheme, as new acolytes to these communities barked louder to pull more of the naive to spend to prop up made-up currencies built around pixelated images.

Several years back, crypto currency had this same feeling of raving madness. On the uptick in Bitcoin, a whole slew of crypto bros poured in to mint coins to support their half baked startup concepts. Even legitimate startups like the chat app Kik got sucked into the crypto craze as a way to prop up their teetering business models.

Eventually the coin economy collapsed. No one wanted to invest money, time, or attention to something of no value and zero liquidity. Crypto was not going to become the new stored unit of value to replace clumsy paper currency. Nor was it going to remove all the intermediaries in the payments chain, become the global fiat currency to bring equality to the world, or blaze the path to dethroning VC's by providing unlimited capital for startups.

There is two-fold danger in technology hype. You either buy into it and get sucked into a dead end, or you reject it, only to miss an important turning of the page in the history of progress. We know this to be true because with every wave of innovation, there is a tiny fraction of explorers that see and grab the future, then the rest of the 99% that miss the wave and the upside that comes with the new normal.

Back in 1992, I had a chance to play around with this tool called Mosaic and create pages in a markup language known as HTML. It was a neat trick to build a few pages, link them together, and format it in a way that was not as easy with typical word processing apps. After the novelty wore off, I forgot about it and went back to hacking into Xterms in the computer lab.

What I did not realize is that this toy called the World Wide Web would be the foundation for building billion dollar businesses. Enterprising technologists built browsers and search engines and portals and domain name repositories. The explorers came to take their claim to the early Web, what some now call Web1. This was the Web of protocols and links and the infrastructure to make the web useful to a wider audience of non-technical people.

By the mid-Nineties, the Dot Com era was taking off. There was a buzz in Silicon Valley that the tech industry was finally going to unleash a huge wave of innovation. The geeks were upending old school companies and making tech ubiquitous in the home. Amazon was reinventing the stodgy world of book-selling. Yahoo and AOL were changing the model of media, content, and advertising. Urban Fetch and Kozmo were disrupting last-mile delivery.

At that time, I had switched careers to become a software engineer. In the first several months in my first job, I had spent considerable time building and maintaining a client server app for managing sales and marketing information. Then I was able to convert this app to an actual live Web app. It was not as slick or full featured as the Windows front-end given the limits of HTML and Javascript, but it worked and solved a big problem in providing an app that any of our many resellers around the world could use to share sales and customer data.

Then I had a thought, could other companies use this software? Given the positive reception from the sales team and our resellers, it seemed possible. So I asked our CEO if this might be something we could sell as a service. He said that was a ridiculous idea. What I did not know at the time is that an executive from Oracle had the same idea. That person was Marc Benioff and he launched Salesforce a year later.

Salesforce ushered in a new era of the Web in the wake of the Dot Com bust. The Web was interesting, but it was not essential. It was slow to access, incomplete, or simply more work than existing real world options. There was no mobile, little worthwhile content, and the functionality was limited. It did not give us anything new other than a skeuomorphic version of our existing world rendered in flat web pages. The Web was still a toy for the eggheads.

Salesforce and other tech companies in that era made the Web interesting for businesses. The idea of accessing sales, accounting, HR, service, and other business functions over a browser and to not have to buy upfront overly complex software was a revolution. What started as the mantra "No Software" evolved into a whole new software model called Software as a Service, or SaaS.

While businesses were modernizing their software stacks, a new crop of startups emerged to build apps for consumers. The 00's was the rise of the social web, built by a category of sites driven by the mission to digitally connect the millions and billions around the world to unleash the enormous wealth of collaboration and collective innovation. Sites like Facebook, Twitter, Reddit and others enabled people to connect, interact, and engage.

Underneath these business solutions and consumer sites and mobile apps was a new type of infrastructure that was powering this more interactive web. WIth the launch of storage and compute services from AWS, any company could scale without having to build a data center from scratch. Startups and enterprises could also accelerate the launch of new services and scale those services globally.

This is the era of Web2. It was the shift from the static to the dynamic, from basic primitives and protocols to rich services and API’s. This is the world we know and feel comfortable in, but only to a point. We accepted free or lower cost services in exchange for our data, our privacy, our mental well-being, and our safety. We took the devil’s bargain and found that the negatives are profoundly disturbing.

In this world where data and power and reach has become so centralized, it is inevitable that another movement would rise up and challenge this push towards consolidation. Instead of finding new ways to collect your data, this movement says you own and control your own data. Instead of selling you data to the highest bidder, this movement says you own your own data to sell and monetize as you please. Instead of others profiting from your engagement, you and only you can profit from your data and content and contributions.

That is what web3 is leading us toward. While the word “decentralized” comes up often in discussions and definitions of web3, the real value of web3 is ownership of value creation. This value is not organized through corporations, but through participation in communities. Decisions are not made based on the whims of a small number of self-interested executives, but through the collective mechanisms of owners in the community, verified and visible through open and transparent technology.

For all the energy and excitement being generated around web3, we have still not reached the era of the Ownership Web. The artifacts of web3 at the moment seem trite. The apps are mostly web2 apps, but built on a blockchain. Most of the blockchains themselves run the majority of their nodes on centralized cloud infrastructure providers. Security is leaky, scams are abundant, and skeptics abound. For many, this is not the web3 anyone signed up for.

This is early days for web3. Social media is a great amplifier of opposing viewpoints, so all you will ever hear or notice are the views that conform to your notions of web3. You are either all-in or all-out, but neither is the full story. In the next post, I will dive into how web3 will unfold and why web3 is inevitable, even with all the very good reasons people have for being skeptical.

How do you see web3 and blockchain evolving in your organization? What are you seeing are the biggest risk factors and opportunities that come with web3?

Mark Birch, Editor & Founder of DEV.BIZ.OPS

DEVBIZOPS

How We Got to web3

What you are missing about web3 and how innovation works