Jan 19, 2023
8 mins video
Our colleague Wolfgang Männel gave the following keynote speech at the Web3 Investor Gathering in Davos 2023 at the Hotel Seehof (video is also available at the bottom of the page):
I want to extend a warm welcome to everyone attending this Web3 Investor gathering. As a co-founder of an early-stage venture capital fund focused on Web3,
I am happy to share my personal views on the direction of this industry. As we delve into blockchain technologies, it's important to take a step back and reflect on the events of the past year.
In 2022, the crypto space faced several disasters that threatened to damage its reputation, with many high-profile fraud cases, scams, and get-rich-quick schemes. Companies like FTX, Terra Luna, Onecoin, Celsius, and many others, resulted in people losing billions.
It's true that those companies were centralized, which actually completely goes against the decentralized nature of blockchain technology.
But for many people, the distinction between centralized and decentralized may be unclear or unimportant.
I predict that the worst is yet to come.
As a partner of a Web3 micro fund, does that frighten me?
Let me explain why.
History has a way of repeating itself. We've seen it with all major technological and financial innovations.
In 1932, there were congressional hearings in the US on the criminal actions of the financial industry. "Banksters" were accused of selling bonds they knew were worthless.
A similar thing happened during the subprime mortgage crisis in 2008.
Replace bonds with tokens, and you have what's happening in the crypto world today.
The key difference is that in the crypto world, everyone can be his own banker with relatively few restrictions.
Did we shut down the financial industry? No. We regulated it. And that's what we need to do in the crypto world, too.
Despite major failures such as Webvan, the internet is still thriving, medical device innovation continues despite Theranos, telecom companies remain despite Worldcom, and energy trading companies still exist despite Enron.
This is a testament to the resilience of our economic system. These failures did not mark the end of e-commerce, medical technology, telecommunications, and energy.
If we want to tackle the problems facing our world and make progress, we must continue to innovate and implement frontier technologies. Technology enables us to create and share knowledge, communicate, and connect - all essential elements for any society to move forward.
As we explore the exciting possibilities of Web3, blockchain technology, and crypto, it's important to remember that new technologies can also raise ethical concerns and have unintended consequences.
As members of the Web3 venture capital community, it is our responsibility to consider these implications carefully.
It is still uncertain what impact blockchain technology will have on society as a whole.
As early-stage investors, we are often presented with a large number of underwhelming opportunities, basically 95% of all startups that we see. However, among the remaining 5%, there are some truly groundbreaking startups.
One such example is AdHash, a Swiss company using blockchain technology to revolutionize online advertising in a way that addresses the negative effects of climate change.
Did you know online advertising emits more CO2 than the global airline industry?
Another example of the potential impact of blockchain technology is Molecule, a startup that utilizes NFTs and DAOs to enable decentralized life science research while protecting intellectual property.
This inbuilt IP protection has the potential to improve drug development greatly.
It's easy to dismiss NFTs as simply overpriced JPEGs and to view blockchains as environmentally damaging.
But, as companies like AdHash and Molecule demonstrate, there are perfect use cases for blockchain technology unrelated to bitcoin, fintech, or fraudulent token schemes.
As founders work towards building sustainable solutions, Web3 is increasingly becoming part of the conversation.
I said earlier that I believe that the worst is yet to come in 2023.
It's often said that it's darkest before dawn.
I truly believe that we are only just scratching the surface when it comes to understanding the full potential of Web3 architecture and the paradigm-shattering business models that can emerge from it.
As venture capital firms, particularly in the early stages, we have the unique privilege of engaging with founders and discussing groundbreaking ideas long before they become mainstream.
And as those who make funding decisions, we have the power to support these innovative projects and shape the future of Web3 technology through our funding choices.
But it's not just about funding the right projects.
We must also work to educate the public about the benefits and limitations of this new technology.
The industry must prioritize security to prevent negative headlines about hacks and breaches.
Ease of use is also a crucial issue as, currently, working with crypto can be as cumbersome as checking your email using a Nokia Communicator before the launch of the iPhone.
Most importantly, building trust is crucial in an industry that claims to be built on a trustless architecture.
As we work to overcome these challenges, we can shape the future of Web3 technology and bring about positive change.
But we must say what things really mean.
Not since George Orwell's “1984” have we as a society so often turned the meaning of words upside down.
We talk about crypto democracy when in fact, the network is still in the hand of relatively few. We talk about decentralized systems when often they are not. We talk about trust when people are defrauded every day.
Unfortunately, some people within the crypto community are no better than some politicians we often criticize.
Politicians are sometimes caught calling a lie “the truth”, and unfortunately, many people believe them.
The same is true in the crypto world.
When I first entered the venture capital industry in 2000, the year of the dot com crash, headlines were questioning if the internet was dead.
The VC community was reeling from regret over investing in so many underperforming internet companies, and many individuals lost a lot of money from investing in overhyped IPOs that turned out to be failures.
But today, the internet industry has grown to be so much more valuable and impactful than we could have ever imagined back in 2000.
I have the same belief about Web3 and blockchain technology.
My venture capital colleagues and I have the privilege of speaking with many exceptional founder teams every day.
It is these conversations that give us great hope that Web3 and blockchain technology will be able to make a real difference and leave a lasting impact for the better.
We are only just getting started.