Elon’s Twitter Takeover: What this means for Web3

The chain of events leading up to Elon Musk’s $44 billion Twitter offer and acceptance feels like a well choreographed waltz by two billionaire bros.

source: CCN.com

Timeline  

February 2020  Twitter’s biggest investor Elliot Management announces plans to oust co-founder Jack Dorsey as CEO. Something about him running two publicly traded company, yet also seemingly distracted with his personal life. Elon responds with:

November 2021  Jack abruptly resigns as CEO.

December 2021  Jack renames Square to Block – to embrace cryptocurrency and the blockchain. Note he’s a Bitcoin Maximalist (someone that’s all in Bitcoin and believes all other coins are inferior).

March 2022  Elon takes a 9% stake in Twitter, becoming its largest outside shareholder.

April 10 2022  Elon turns down a seat on Twitter’s Board.

April 14 2022  Elon offers to buy Twitter for $44 billion to take it private in the name of free speech.

April 25 2022  Twitter accepts Elon’s offer. Jack tweets:

What We Know

Based on Elon’s tweets, this is what we know so far about his intentions of buying Twitter:

  1.  He will take the company private.
  2.  Make it a free speech platform.
  3.  Create an edit button (apparently this is a big deal).
  4.  Plans for an open-source algorithm “to increase trust, defeating the spam bots, and authenticating all humans.”
  5.  Get rid of advertising and move to a subscription model. He even suggested Dogecoin (the meme coin that Elon supports) would be an acceptable form of payment for a Twitter subscription.
What We Don’t Know

…is everything else.

Will Jack be reinstated as CEO? Was this the plan all along? What are they masterminding for the future of crypto with both Twitter and Block?

How will free speech on Twitter really pan out in practice? What happens when extreme and potentially harmful views now have a platform?

Does Elon actually care or is he just gaining more traction to continue to troll the SEC?

The big question mark that’s really on the peripheral – is what is to become of the Web3 movement, whose ground 0 is on Twitter in the first place? Especially if Elon and Jack have both entirely brushed it off?

Hint: “between a and z” is a jab at VC firm Andreessen Horowitz (a16z), who really is spearheading this movement.

As mentioned, Jack is a Bitcoin Maximalist, so everything else is inferior, including Ethereum (where Web3 is built on), which he’s expressed his disdain for. It is ironic since his first tweet was sold as an NFT (on the ETH blockchain) for $2.9 million. What gives Jack?

This excerpt sums it up best:

“I think it’s actually the opposite: Ethereum hates Jack.

Ethereum is, ultimately, kryptonite for supercompanies such as Twitter, as well as Facebook and Google and any of the other massive, centralized public-owned platforms that most of us live on these days…which make their money by knowing as much about you, the user, as they can glean from the things you tweet, like and retweet.”  

In a tweet storm, Chris Dixon (a16z VC partner) said:

“Web 3 startups begin to eat into the margins of Web 2 incumbents. The higher the take rate, the more vulnerable the incumbent… Social media platforms like Twitter, Instagram, and TikTok have take rates of 100% — they don’t share any revenue at all with creators! That’s been great for them but bad for users.”

So both sides are battling it out (with Elon on Jack’s side of course) and us bystanders are left to pick a side (or not). Both are your typical privileged, rich, white males in positions of power. It’s hard to find trust in either… What are their motives beyond money and power? Does Elon really care about democracy and freedom of speech? Is Jack really a hippie that believes Bitcoin will create world peace? Does Chris really care about reclaiming the power and value back to the people via Web3?

And so the plot thickens…

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Down the Web3 Rabbit Hole – Top 10 for the Non-Technical Newb

It has been a month since I’ve tripped over an NFT rock and fell down the Web3/crypto rabbit hole. My fascination with Web3 is more than merely hopping on the latest (polarizing) trend – I think it might finally provide some tangible clues to some “lifelong” unanswered questions.

I’ve spent the last decade or so really trying to understand this concept of “work” – the compartmentalization of our lives between 5 work days and 2 play days/week, between a career from 20-66 years old and retirement from 66 to death. What our Boomer parents understood it meant to make a living is in stark contrast to what Gen Z and Gen Alpa will understand it to be.

As millennials stuck somewhere in between, we witnessed how the digital age spawned a new era of what “work” could look like for the creative economy – whether we rode that entrepreneurial wave or sat on the corporate sidelines – it happened right under our feet.

When I went down this rabbit hole, I came to the realization that there’s a high possibility that we’re not just living in the middle of a digital disruption, but potentially the beginning of it.

That’s what excites me, that’s what keeps me up all night these days. It was a complete paradigm shift of feeling you’re late to something, but then realizing you might not be after all. 

It’s easy to get lost and discouraged amongst all the chaos – critics, non-believers, trolls, scammers… And even the one’s that seem like experts are not even experts – because it’s forward looking, highly speculative and aspirational. 

With every belief or non-belief, we discern and validate it through our personal lens of what we want to filter in as truths. Nobody’s right and nobody’s wrong. Most people won’t care until they care and care until they don’t.

With that – take this journey down the Web3 rabbit hole as lightly or seriously as you want – it’s a fun ride and you never know what epiphanies you might have or opportunities you might be presented with.  

Below are my top 10 recommendations of podcasts, articles and people to follow for the non-technical newbie . 

LISTEN 

1. The Tim Ferriss Show: The Wonders of Web3 w/ Chris Dixon and Naval Ravikant  

source: Tim.blog

I have been a fan of Tim Ferriss since “The 4-Hour Workweek.” I read his book at some point after graduating college in 2007. His (at the time) unconventional and prescient ideas of “Life Design” and entrepreneurship had quietly infiltrated my mind and would remain a stubborn, sticky thought that would not leave until I could figure out what to do with it. The struggle remains.

He has since evolved and his true genius really shines through in his podcast. Unfortunately, his long-form interviews, full of so much value bombs, can easily get overlooked in a world with such a short attention span.

I highly recommend this episode with Chris Dixon (a partner at VC firm Andreesen Horowitz) and Naval Ravikant (co-founder of AngelList). They really take a sharp, intellectual knife and cut through all the superficial noise out there on this topic.      

2. Bankless: The Ownership Economy  w/ Li Jin   

source: NYTimes

Li Jin, 31, is known as the It Girl in Silicon Valley. I love her take on how Web3 and the ownership economy might bring in the dawn of the Golden Age for content creators to finally reclaim their financial powers back from the platforms that made a ton money off of them. This is a great episode covering most of what she’s written here

3. Where It Happens: The Unlimited Potential of Web3 w/ Alexis Ohanian

source: Insider.com

This was a surprisingly interesting conversation, albeit with tech dudes over tequila – but it’s one worth listening to. I didn’t know anything about Alexis Ohanian, except that he’s married to Serena Williams and the co-founder of Reddit, but he’s someone to follow in this space.   

4. Sharon Says So: Your On-Ramp to Cryptocurrency with Brit Morin

source: Brit.co

I had to include an interview with Brit from Brit + Co on this list. Brit Morin will be one of the major female players to take Web3 mainstream for women with the launch of her BFF crypto community. She takes a very fun, approachable, non-techie POV on crypto. This felt like a light conversation between girlfriends.

Tip: Try listening to these long episodes on a 1.25x-1.5x speed.  

READ

5. NYTimes: The Latecomer’s Guide to Crypto   

It’s as comprehensive as it gets from an unbiased POV.  

“I’ve been writing about crypto for nearly a decade, a period in which my own views have whipsawed between extreme skepticism and cautious optimism… I’ve come to accept that it isn’t all a cynical money-grab, and that there are things of actual substance being built. I’ve also learned, in my career as a tech journalist, that when so much money, energy and talent flows toward a new thing, it’s generally a good idea to pay attention, regardless of your views on the thing itself.” – Kevin Roose

6. Creator Economy: Curious Beginner’s Guide to Crypto 

This is another comprehensive guide that’s easy to read for beginners.

“I want to help people make a living doing what they love online. I’m more convinced than ever that the way to make this a reality is through crypto.” -Peter Yang

7. Digital Native: Most People Don’t Know Web3 Exists

Digital Native has some interesting, easy to read articles on Web3.  

“But here’s the thing about Web3: most people will never know it exists. The reason for this is that while Web2 was a frontend revolution, Web3 is a backend revolution. In other words, Web2 reinvented the things that people interact with, while Web3 reinvents the plumbing behind the scenes.” -Rex Woodbury

8. Chris Dixon – Collected Web3 Twitter Threads

After his interview with Tim Ferriss, I’m a fan.  

FOLLOW 

9. Top Twitter Accounts to Follow

I never go on Twitter and actually activated my account for this – because that’s where all these people are. Web3 knowledge will not be found on Instagram – trust me. I love IG but it’s not the place to learn. I recommend following all the above (Chris Dixon, Naval Ravikant, Li Jin, Alexis Ohanian, Brit Morin) and of course Vitalik Buterin, founder of Etereum – where Web3 is being built on.  

10. This blog – Nat3.0 

Thanks for reading and have a fun ride down the Web3 rabbit hole!    

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Zuckerberg Wants in on the Web3 Action

Meta (fka Facebook) is stepping up its game to help creators monetize on Facebook and Instagram, before they lose them to, not only TikTok, but the Web3 world. Last month Meta had announced it will be incorporating NFTs on its platforms – which was a huge mainstream win for NFTs. They now plan on releasing their own “social tokens” and “creator coins.” These are informally being called “Zuck Bucks.” Catchy but do we like? These social tokens will only work in the Meta ecosystem (and inevitably the Metaverse) – not the decentralized ones we understand on the blockchain.

Understandably so, as they had attempted to launch their own cryptocurrency project called Diem (fka as Libra) back in 2019, which was shut down due to regulatory issues.

There has not been a formal statement issued on how these social tokens will work, but if it’s at all close to how Web3 enthusiasts envision it – that’s a closer move to a “Web2.5.”

Meta had announced it would commit to paying $1 billion to creators through 2022. This included paying for Facebook and Instagram reels views (Reels Play Bonus Program) ranging from $600 up to $35,000 – a way to compete with TikTok. It seems recently Meta made changes to the payout system, without any real explanation, increasing the views threshold, making it harder for creators to earn. Yet another reason why it’s important to never build entire businesses on rented land.

Giving Meta the benefit of the doubt on this one, and considering the timing of it all, I’m guessing they’re allocating a portion of their budget to roll-out these social tokens to creators. I’m still not convinced Zucks is a robot and think he might actually care about putting more money back in creators’ pockets.

On a recent podcast episode with Tim Ferriss, Zuckerberg briefly shared his view for the future of the creator economy:

“If you just think about how many people today basically do jobs that they – might not actually like that much, but they’re supporting themselves”

Interpretation: A lot of people today are in jobs they hate to pay the bills.

“Compared to where I think and hope that the world is going, which is just a much more robust creative economy – where way more people can do things that are intellectually or physically interesting to them. And in doing so, build up communities around that and have enough monetization and economy around that to support that”

Interpretation: The creative economy is what will propel the future of work as more people will be able to do what they love and care about. Individuals will be their own economies, driven by these communities that support their work. The “monetization” will most likely have to be these social tokens/creator coins.

“That, to me, is the modern version of how do you upgrade the way that people live and work to fulfill human potential”

Interpretation: 🙌🏻

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It’s Going DAO’wn – Corporate Takeover

Okay, not really

“If you want to go fast, go alone, if you want to go far, go together”

source: A. Shuraeva

A dream always starts first with one person. As an individual unit, the advantage is speed, but they can only take that dream so far without a team. As the business grows, so will the team – but not everyone will be treated equally. It will be efficiently hierarchal – executives, managers, staff, interns… a top-down approach, and the wealth will be distributed accordingly. The owner gets most of the profits because, after all, it’s his/her mission being executed. The workers, in return, get compensated for their specialized skills and time.

What inevitably happens to workers (especially those at the bottom) is they get burned-out, uninspired or unmotivated.

source: pixabay

The greatest disruption to the workforce happened during the COVID-19 pandemic. Whether people were laid off or chose to quit – it broke up our autopilot routines, and forced us to take a step back and reflect on our lives and careers. This most assuredly led to the Great Resignation, Big Quit or Great Reshuffle of 2021 (and a spike in divorces/breaks-ups, but I digress).

Individuals care just as much about growth, flexibility, autonomy and meaning in their work, as much as compensation. Most companies know this and have invested a lot on improving work culture, work-life balance, and opportunities for growth within their organizations. But what may be really missing are a lack of autonomy and ownership (sure there’s stock options, but let’s be real – it’s just not the same).

DAOs (decentralized autonomous organization) attempt to solve just this. It proposes to flip the entire corporate structure on its head – a bottom up approach.

This one was hard to write about and keep light. Most articles out there really got into the economics and (unbuilt) technology of it. There’s so much to be said for something that’s theoretical and experimental. But that’s the beauty of it all – we don’t really know for sure how DAOs will look like in the years to come.

What I know for certain is it can turn off a lot of non-techie people (like myself) in trying to get to the heart of how it can be an absolute game changer. I will narrow this discussion down to its parts at a bird’s-eye view. If you want a deeper dive, I recommend this comprehensive article from The Generalist as a starting point.

Decentralized 

There is no CEO. A group of people agree to a set of rules which are written in the code of smart contracts. The self-executing contract can rid of unnecessary meetings and administrative tasks, as actions can be programmed to run when a condition is met.

For example, a DAO is in the business of investing in NFTs (eg., PleasrDAO). Tokenholders can vote on which NFT will be their next investment. Once a majority vote is casted (condition is met), the smart contract can automatically move forward and make the purchase (action executed) with the DAO’s crypto wallet. For this to happen within a traditional company, meetings may have to be held and tasks to be delegated. In this hypothetical, an actual person doesn’t need to go into the OpenSea NFT marketplace – it’s all built into the smart contracts. In theory, the DAO can run itself and eliminate self-interested leaders.

Autonomous 

Freedom to govern itself. Individuals can choose to contribute in ways they think best.

Access to DAOs can be achieved via social tokens. As the DAO grows, so does the value of the tokens. This provides a financial incentive for individuals to be invested in its success in the long term. Everyone is an owner.

“Essentially, DAOs are owned by the people who create value in them…DAOs empower a broad ecosystem to take action and create value on its behalf.”

-The Generalist

Organization

A group of people come together to collaborate on a shared purpose and mission they care about.

source: K. Subiyanto

The biggest question is how you can even begin to trust strangers over the internet. It also doesn’t help that members can join with pseudonyms. It may level the playing field, especially if they’re a public figure, but some people can take advantage of that anonymity when personal reputation isn’t on the line.

Full transparency on the blockchain would be a start to build this trust. Every action taken is recorded and open for everyone to see. Most importantly, it cannot be tampered with (it’s immutable). Ideally this encourages individuals to act accordingly and follow the rules. If anyone violates the rules, the smart contract might be triggered to lock the individual out of the DAO.

I would say a successful example of trusting strangers to execute on a shared mission, currently in the Web2 world, is Wikipedia – anonymous volunteers collaborate to create a living digital encyclopedia for everyone – for free.

source: Wikipedia

Anyone can go in and edit (within community guidelines) and a consensus must be reached, because there can only be one article on such topic. It’s self-policing and relies on its community for fact-checking. This should in theory reduce issues user-generated platforms face (like Facebook and YouTube) with misinformation, fake news or conspiracy theories. If anything is ever made by the people for the people (and actually works) – it’s this.

A problem it does face, is it runs on non-profit grants and donations. We’ve all at some point seen the red block pinned to the top of every article asking for donations or Wikipedia is in danger of being shut down. An interesting question to pose is how Wikipedia would look like as a DAO 🤔

What can go wrong with DAOs?

Probably everything – and it did with the first DAO that entered the scene – TheDAO (I know, so original). Launching in April 2016 as a venture capital fund, it became “one of the largest crowdfunding campaigns in history.” By May, it had 11,000 investors and 12.7 million ETH or $150 million (today it would be valued in the billions).

In June it was hacked with 3.6 million ETH sent to a holding account. Fortunately, Ethereum founder Vitalik Buterin stepped in and was able to put a “hard fork” in the Ethereum network – which basically splits the entire blockchain at that moment in time, with the new version entirely wiping out the hack event – the one we all know today. Nonetheless, that left behind a bad rep for DAOs, followed by a long “DAO winter.“ People are finally slowly building in the space and gaining some traction.

A popular one today is the Friends With Benefits (FWB) DAO, as described in the NY Times – “a group that has been compared to a “decentralized Soho House” and a V.I.P. lounge for crypto’s creative class — is succeeding at generating hype and making money.” Basically a decentralized, digital world of what Anna Delvey wanted for ADF. IYKYK.

source: Netflix

Launching in 2020 and raising $10 million, FWB now has around 6,000 members. Among other creative projects, FWB is currently developing their first physical product – a yerba maté drink. I know, so millennial, but I kinda love it.

TAKEAWAY

There’s still a lot of experimentation and infrastructure that needs to be built out in this space. It all sounds fascinating in theory, but there are lots of holes to patch up and work to be done to make this vision a reality.

Corporations have issues of their own, and DAOs may attempt to solve some of them – but that introduces a whole set of problems of their own. How DAOs evolve in the future might be entirely different than what the Ethereum Whitepapers envisioned in 2014 – it might even be somewhere in between the spectrum of centralized vs decentralized, autonomous vs dependent. A hybrid that we can all get comfortable with.

With that, I’ll leave you with this interesting excerpt from BanklessDAO:

“We’re leaning toward a more fluid way of working, where individuals will follow their interests, collaborate on multiple projects simultaneously, and not have the constraints of working at a single company. At the same time, these individuals often need to collaborate with others to achieve their goals and don’t want to work independently for the rest of their lives….

The next generation of workers might start their professional career in a DAO, starting by simply vibing into these tokenized communities, helping to grow the projects they love, getting paid for having fun, and ending up never working for traditional companies.”

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Social Tokens: the Future for Creators?

There was a time when celebrities alone had the greatest influence on our buying decisions. Companies would spend significant amounts of their marketing spend on celebrity endorsement deals. It was, after all, the best way to reach the masses. 

With the rise of social media in the last decade, brands took note of another group – influencers, who leveraged their popularity by “portraying a certain image about themselves and their lives to sustain and grow their influence.” The higher the number of followers (in the millions), the more likely brands will pay up. It even became the norm to see your favorite influencers invited alongside celebrities to exclusive events from big fashion houses, or on the red carpet at the Oscars and Grammys. 

Over the last couple years, brands casted their net wider as they saw the value in micro-influencers, those with a smaller following (less than a million) who themselves casted their net smaller by niching down. Their content were more personalized and engagement was higher, as they resonated more with a target audience. We tend to follow people who are mainstream aspirational #goals, but also those who are relatable. 

More recently, it seems being an influencer had become cliché with a slightly negative connotation of someone who “forge as curated and polished an image as possible.”  

source: cottonbro

Enter the content creators, who are more focused on creating engaging and informative material, rather than to influence for brand sponsorship. “They have the power to grow a large audience, but it’s typically less about the creator themselves and more about the information they’re sharing.” What begs the question is how will they have the power to grow their audience and monetize their “digital craft” if they don’t amass a following and play by the same rules as influencers? Some would even argue most influencers don’t take home that much from Instagram, YouTube, or TikTok – who pocket a larger chunk.    

It seems Web3 visionaries might have the answer.

Social Tokens

Web3 proposes to add more meaningful monetization streams, where platforms don’t reap the majority of the rewards, but rather value would flow in BOTH directions between the creator and consumers.

“If NFTs are the gateway drug for creators to enter the crypto space, social tokens could very well be the next wave.”

Peter Yang

Social tokens are premised around the concept of an ownership economy, with creators having a direct relationship with their supporters, without the middleman. Tokens are fungible (interchangeable) digital assets on the blockchain that can fluctuate in value, and are issued and backed by an individual or community. 

Fans can now further engage (which most “super fans” already do) to drive the creator’s economy. These tokens act as a sign of loyalty – as the creator grows, so does their community, and accordingly the token value would be shared amongst all.

source: M.Bertelli

The success of crowdfunding platforms, like Kickstarter, show how people are excited to be a part of something and invest in projects they believe in. Social tokens will allow people to now invest in individuals and communities and be incentivized to see them grow and succeed. 

“Social tokens uniquely combine elements of patronage (support for the artist), fandom (closer connection to the artist), and investment (financial upside from the appreciation of the digital asset).”  

Rex Woodbury

For example, you’re an artist that issues $Artist tokens. In exchange, supporters get community benefits, such as 15% off your artwork for sale, sneak peaks to your upcoming projects, and maybe 15% of all future sales of the NFT you produce. You create an NFT and put it on the market and it sells – the token holders all benefit. The creator can also buy back tokens and “burn” them to remove from circulation, reducing supply (and assuming demand remains), thereby increasing the value of the tokens.

https://twitter.com/rex_woodbury/status/1472626994466590721

But as all things with grand utopian Web3 visions, current reality sets in to make the path there that much harder and longer. The reality being: (1) scam artists that come out of the woodworks whenever there’s new technology and money to be made, and (2) the well-intentioned SEC protecting consumers, but also making it an uphill battle. 

Legal Considerations

I went down a rabbit hole with the securities law considerations, but will keep it brief here with links should you want to delve deeper.

Disclaimer: this information is for informational purposes only, and should not be construed as legal advice in any subject matter.

  1. Social tokens can be considered utility tokens (provides direct access to a product or service – good), or securities tokens (acts like shares of stocks – no good). The SEC uses an archaic litmus test called the Howey Test to determine if it’s a securities (SEC v. Howey, landmark Supreme Court case in 1946). A good article here
  2. Because tokens have the ability to fluctuate in value, this all becomes really gray territory. Just because you and your lawyers claim it’s a utility token, the SEC can repaint that picture and shut down your project real quick (see Munchee case).
  3. ICOs (initial coin offerings) took over the crypto world from 2017-2018, with the majority of them turning out to be fraudulent. The issuers of the tokens turned out to be mainly scam artists and investors where SOL with no recourse.       
  4. It seems more recently, creators are getting creative and, instead of ICOs, are resorting to a new marketing tool called airdrops – whereby free tokens are given to community members. Again there’s no such thing as free – because in exchange the recipient is expected to perform small marketing tasks. The SEC might view this as similar to a free stock offering and it might fall under their purview. A good Law Review article here.         
  5. Tokens might still have quite a journey to trek as the law is still developing. The former SEC director Hinman’s speech in 2018 concluded that a digital asset could start out as a security while it’s being developed, but then evolve into a non-security when it’s on a decentralized network. The problem with this, is that for a network to mature into a decentralized one, that is not dependent on an individual or group, it first requires such centralized efforts to get there. This creates a Crypto Catch 22. The SEC provided a 3 year safe harbor in April 2021 to address this problem.  
Takeaway

Social token are still in their experimental phase as most new projects try to create them as closely to  utility tokens as possible – redeemable for products, digital goods, services, access to exclusive groups, or merely acts as loyalty points. They’re still an extremely risky asset class that has not been fleshed out to their fullest potential.  

From the creator’s perspective, it’s important to proceed with caution (and consult a lawyer if necessary) when structuring these tokens. From the consumer’s side, exercise caution and only purchase tokens from creators you trust and believe in. 

Overall, I wouldn’t be deterred by all this, but rather would keep a close eye on them for the years to come. We might end the year with renewed hope of something entirely feasible to move forward with.   

“Tokens are to the Web3 what websites were to the Web1”

Shermin Voshmgir 

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