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Chris Dixon is the founder and managing partner of a16z crypto andrion horowitz's VC fund for crypto and web3
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startups he's also the author of a new book read write own building the next era of the internet we're having a lot
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of Silicon Valley people on uh of late we had aen Lee on last week welcome Chris thanks Ken thanks for having me so
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uh so it's been a a rough couple years for crypto and blockchain but you're still making a case for it in this book
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um actually Scott has two in a lot of way but why don't you why don't you explain why you're still a Believer yeah
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sure so I mean in the book I try to explain what I would call the productive aspects of blockchains and why I think
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that blockchains can help us um return the internet to its original ideals as being an open and Democratic Network
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which is why I got involved I've been involved in the internet for 25 years I got excited by the early ideals of the
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internet and you know look if you fast forward to today the internet's become very Consolidated the top five tech
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companies account for half of the nas NC 100 market cap top 1% of social networks
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95% of traffic you know Google and apple have a duopoly on mobile operating systems I'm sure you both have talked
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about this plenty it the internet I worry the internet's at risk of becoming like 70s broadcast TV or something where
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you have three channels um and I think that's bad for the world I also think it's bad for our business you know we're
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in the startup business um we we want a dynamic internet but you write about uh blockchain technology and this is a
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quote from you this this is a chance to create the internet you want not the internet you inherited it's something we
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talk about a lot like that the same companies are in charge um what is that what do you mean by that it when you say
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there's lots of opportunities for Innovation here uh that starts from Ground Zero presumably versus starts
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with Google in charge or Microsoft or whoever I I'm guessing that we somewhat agree on the problem um meaning having
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five companies control everything is um not ideal um I think there's different ways one could think about solving that
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and so for example a lot of people talk about regulation I believe there is a role for regulation um I think you know
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we'll see what happens with doj and apple and things like that um I my proposal is to also try to do it through
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Innovation and by and and through that we want to create a new wave of Internet services that return power to the edges
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of the network and so to give you an example one of the reasons that social networks are so powerful is you're
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locked in right they have Network effects so you know I know I think you switched recently to threads um and when
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you did you had to give up your audience right you had to go build a new audience
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I I'm still over there because I got there first but go ahead but okay so you maybe maybe you're the exception but
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generally you're locked in right to these networks so like and especially if you're like a creator for example and
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you build a business on Tik Tok or Instagram and and you don't like the fact that they changed the algorithm or
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did some other thing you're locked in and so one of the key aspects for example in uh in these new
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blockchainbased social networks which is one category we're investing in is a user owns his or her identity and they
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own their follow followers in the same way you do in the email world right so if on email if you have a newsletter on
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substack and you don't like substack you can switch and you can take your followers with you so that's just one
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example of how a different architecture by empowering users with ownership this is the read write own that's what I mean
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by ownership is is a user controls their followers not the service that that change in architecture I believe can
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have sort of profound Downstream consequences on on the ultimate control of these services and the economics and
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you know these these networks I don't think we knew this 10 or 15 years ago but today we know they control the flow
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of global money you business culture politics they're very very important um and I and I don't think that having four
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or five people whoever they might be maybe you know at one point you like the management one point you don't I just am
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fundamentally against the idea that five people can control those things I think
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that they should be more like the early web you're talking to people who like to
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own so Scott go ahead Chris good to see you so and this may be the wrong bucketing but I think of blockchain in
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terms of front- facing applications as bucketed into three areas there's the tokens you know crypto there's nfts and
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there's Dows um Dows haven't really gotten any traction nfts I think have lost 90 plus percent of their value I
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think I'm being generous there and the the token Market's been kind of loosely speaking in terms of market cap and cut
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in half even with its Resurgence from its peak what talk about those three categories where do you see the
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opportunity yeah so I think with Dows so a couple things like I mean there there
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are active Dows um a lot of them are around these defi protocols so for example Unis Swap and compound and um
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maker are what's interesting about them is they're their networks in the same way that Facebook is a network but the
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users control those networks um and those are networks that have active Unis swap had trillions of dollars in trading
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volume and the users decide how to upgrade the code um admittedly that is early those are experiments in my book I
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have a section on what I call Network governance where I talk about this and my argument is essentially that it's a
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um a very powerful new way to design Community governed systems I I don't claim that we've fully figured it out I
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I think that it it requires a lot more work to evolve nfts like the nft standard was the was finalized in 2020
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then we had this you know big rise in the market last year in 2023 there were $8.6 billion in sale so I think the sort
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of decline has been exaggerated but how much of that 8.6 billion do you think is
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is false Flags is people trying to Pump Up the Volume according to we have a data science team and I asked them to
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pull these numbers and they they they believe that's removing wash trading if that's what you're referring to um so so
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so they do believe that but look admittedly that you know it's hard to get the exact numbers but but um I think
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that's a pretty accurate number um and so um the so nfts so and look I think nfts went through I the way I kind of
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look at these things is like the internet we all I think live through the internet bubble right I kind of began my
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real career post internet when everyone thought the internet was over and the way I view it is a lot of these new
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technologies go through these Cycles where people get overly optimistic and I think that probably happened with nfts
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and now I believe they're overly pessimistic all right let me let me ask you about that because you talk about
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the casino culture of crypto which has become the dominant narrative and obviously the law the binance thing s
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bankman freed Etc talk about the less nefarious side and what about the impact of that those those cases
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and also the SEC did approve Bitcoin ETFs a few weeks ago that the price of Bitcoin has been falling the casino
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stuff yeah so overall it's sort of in that moment and I would agree with you there was a lot of real scammy stuff at
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the beginning of the internet for those who weren't there um and it went on for quite a while for quite a while actually
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um but talk about sort of that how to shed it because I think people think of it now with FTX even though they made a
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great investment in anthropic it was mostly not a good story for crypto or in general in my book book I have a long
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section where I talk about this what I call the casino and I am and I'm again very against it and I think it's
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destructive I think it's destructive primarily to Consumers who are victims of things like FTX but I also think it's
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quite destructive to what I'm trying to work on which is to to build a productive side of these Technologies
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but look the way I would describe it is a blockchain is a tool tokens are a tool
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right and just like any tool you know you can a hammer can build or a hammer can destroy and there's two sides to the
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tool and I i' I think there's been lot of attention paid to the casino aspect there are you know like we have dozens
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of startups in our portfolio who are working on the on the productive side and I and I the reason I wrote the book
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partly was to tell that story because I do think it's a bigger story than people
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realize I I also think that we need um more proactive policy we've been calling this for this for years since before FTX
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to put guardrails around the casino stuff to eliminate the offshore activity I look I was involved I mean the reason
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we were not investors in FTX is I was involved with coinbase for years coinbase contrary to I think some some
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popular perception it was heavily regulated their Bank secrecy act regulated they do full kyc and all
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customers there's a there's a whole series of regulations they're audited they're public us company um binance FTX
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there's a whole series of companies that were offshore not audited all these other kinds of you know all these
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running exotic prod products I mean that's the kind of stuff that I think we need to clean up and have very clear
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rules what about the Bitcoin ETF it does sort of introduce consumers to it in a safer feeling way you know if I'm
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getting it from Fidelity I certainly trust them more than even coinbase for example yeah and and I think I think the
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bigcoin ETF was a I mean in my mind is a net positive in the sense of it sort of
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more institutional acceptance oh you say net positive what what's the negative no
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it's good sorry I mean it's good overall I look I I'm very focused on the Utility
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side of building applications and so it's a new Financial instrument so it's for me it's less of a focus that's what
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I mean um and it's just not you know like I would love for to more of the new Cycles to be focused on hey this person
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just came up with a cool new way to fight deep fakes this person just came up with a cool new business model for
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Creative people I think specifically with the rise of AI I see a lot of blockchain applications as the counter
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measure in many ways so like just to go back to maybe if I could talk about the def fakes for a second the um you know
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we're now going to have an internet a wash with fake video a wash with you know very Advanced fishing um yeah we
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have it actually yeah we probably have it um talk to Taylor Swift this week Taylor Swift can you can simulate
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people's voices perfectly now they can take your voice from the podcast yeah they can they can then call I actually
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had a partner Martine who they called someone called his parents using his voice to try to get money this is
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actually like a real thing happening so in that world we need to use I believe tools like cryptography to authenticate
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things and I think you know for example one one way to do that is you one thing a blockchain's very good at doing is
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storing an immutable audit Trail and so you can have an immutable audit trail that says this video is attested to by
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you know it came from Caris Wisher um and it was attested to her by her as an example and so it gives you this ground
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truth in a world in which you lose that I think also blockchains allow for new business models for Creative people in a
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world where like generative AI will put significant downward pressure on you know the ability for let's say an
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illustrator to sell things right if you can just go to a mid Journey or something um and so you know I think it
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becomes more important um in in an AI world so when I think about U kind of the consumer facing Tech technologies
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that it built so much value in Tech and I think about the leadership there I think about the original gangsters I
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think about Gates and jobs and then the new you know the new guys and they were all guys Brin Paige Bezos these say what
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you will about them were they're all Visionaries and and I and I would argue at their core they were all I'll go on I
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think they're good people and the the two kind of iconic figures in blockchain are either in jail or going to jail and
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and my question is who are the new who's the next generation of leadership that you would point to that will quite
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frankly to sort of clean this mess up because right now from a public perception standpoint it feels like a
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levered Ponzi scheme I think there's just two very different worlds Scott so I think there's the the SP SPF world and
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then I think there's you know like people like vitalic bararan and bethereum well you mentioned Brian
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Armstrong or you alluded to him I think look I think look Brian like Brian got you know he got Flack for years years
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for being slow I mean their market share got low single digits um they were getting crushed by binance and FTX if
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you talk to any Silicon Valley VC it was like why is coinbase so slow stocks aren't crazy they're doing really well
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now and then and and Brian like Brian kept I I mean I think what he did was admirable he really kept his head down
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he never changed what he does he invests very heavily in security and compliance
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um and and you know he's not he's not he hasn't gotten all the market share yet but I think that approach has proven
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correct I think Brian has done a great job I think there's folks like metallic and there's a lot more like there's
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these conferences like you go to Devcon it's an ethereum conference and there's like tens of thousands of very Earnest
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kind of you know um uh thoughtful technologists and it feels to me kind of like I don't know 2005 web 2 movement
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when I was you know I was part of that and you go to these things and and yeah and look they weren't I mean like you
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never know who the Larry Page is at the time I mean obviously Larry pagee is I'm
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sure brilliant and everything else I didn't know him over time these folks will emerge I do I do I would say I
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think there's a very strong productive positive movement that I think just gets kind of crowded out by all of the you
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know the coverage of the casino stuff um but I think it very much exists and that's why look that's why I wanted to
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write the book I wanted to go through in detail and explain this and make the case let me ask that then I was just
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looking at coinbase stock which is up recently but it's certainly down from to 2022 like quite a bit like or 2021
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especially um when it was in the you know what is it two I was 330 2 and then it's now 131 it was down in the 80s and
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70s and stuff like that that using them not as an example of you know Scott called them the AOL of blockchain but
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nonetheless um it's that a good thing no I don't think so it was for a while it was a great thing for a while it was
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great though it wasn't um but but it has been around for a while and the main does it have to be mainstream because AI
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suddenly is everywhere mainstream you know it's it's it seems ubiquitous every everywhere does it have to be mainstream
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or just where the electricity where the in where the where the I don't know the drywall or whatever I don't know yeah I
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in my book I analogize blockchains to Steel in the sense of like it's a it's a building material right because people
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sometimes say what problem does it solve and I really see it as a building material for building better internet
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services so I think ultimately if the movement that I'm part of succeeds it will be it won't be some parts it will
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be visible the fact that you can hey there's a social network where I can exit you know there's a I can sell
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digital merchandise as a musician directly to my fans like you'll see parts of it but you won't see all the
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plumbing and I think most of the plumbing is behind the scenes and it and by the way it may may happen with AI too
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maybe AI is just sort of baked into everything I think it's probably a likely outcome AI feels more like the
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internet right it feels more like or a web or or something like that but if you if people wanted to get into crypto
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right now where would you tell them to start I think look I think there's a lot so some examples of things I'm excited
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by we have um a few things around music so there's a project called sound XYZ where musicians so musicians today don't
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make money on the internet they make very little money on streaming a lot of them if you ask them we'll say they go
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offline and they tour and they sell merchandise um to to support themselves and so um there's various projects like
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sound XYZ that let you musicians sell backstage passes and digital merchandise to their consumers and add additional
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income stream so that's one interesting area there's a social network called foraster that's a lot like kind of
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something like Twitter or Facebook except the user controls their name and their followers and can move around and
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developers can hack on it car you remember early Twitter how it became like a developer platform like I was
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very excited by Twitter at that point those are two examples um the the um look there's also stable coins are quite
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popular um in the developing World there were something like $600 billion dollar
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in stable coin transactions last month so there also other you know as I mentioned nfts I think are bigger than
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most people realize that there's yeah there's a bunch of interesting games that are launching like we have one at
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sort of as Style game called pirate Nation where you have nfts is digital Collectibles Eve online the the popular
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is a very popular video game they're launching an nft version soon which let's kind of have more of a
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peer-to-peer economy where users can create spaceships and sell them to their users so I think there's a really
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interesting wave of new companies that are much more accessible um Blackbird is one in New York where it's a restaurant
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um it's actually the founder of resi and eater um Ben lethal you may know him experienced entrepreneur yeah so he's
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doing an nft it's like a restaurant thing where you can use nfts as a way to kind of reward loyal loyal patrons um so
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I I feel like we're having this kind of out of the downturn there's a there's a it feels to me like a lot of people are
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kind of saying hey we got to really level up our game and have really great product experiences and we're seeing a
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an exciting wave and like I'm excited about it there was a fear that a lot of these crypto projects were essentially
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VC's financing a group of intelligent guys who had found something they thought claimed was new
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technology the VC fund would lend its capital and create this project they'd issue a coin because and then kind of
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leveraging the fact this fomo of Main Street Americans who wanted to participate in what was hot they then
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buy these coins and because there's no SEC requirements on uh lockups or even disclosing when You' sell these coins
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that then these VCS would basically dump their entire stake and that these projects s were not financing any sort
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of growth or underlying technology they were essentially Just An Elegant transfer of wealth from mainstream
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investors to the limited partners of VCS do you think there's any truth to those
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claims I think it's possible I think that look I mean I would just say that probably the number one thing that we
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have asked for and pushed for in policy for years is longer lockups okay so we have 10e we're we're Venture F all of
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our funds are Venture funds including the crypto funds they have a 10-year life cycle um we push for long lockups
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in the deals we do but we don't have unlimited Market power if we go push too hard they will do a
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deal with somebody else right and so we have I think the number one thing that the policy makers could do to improve
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the space would be long lockups on every project because I believe in that that real technology takes years to build and
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you need to avoid that yes I look I think all sorts of things have happened but Andre hasn't hasn't been subject to
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these lockups or self-imposed them we in all the deals we do we have multi-year lockups I'm sorry I just want to clarify
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this when you invest in a crypto project and there's a coin issued you have a self-imposed lockup on when you can sell
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those coins the lockups in the term sheet it's it's a term in the term sheet yeah we do and the founders do so the
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crypto projects you you funded in the last few years you have not sold coins you still own those coins we have 94% of
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the coins that we bought we hold in all our crypto funds today so wouldn't that indicate that andreon has taken an
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enormous draw down or loss on these projects given what's happened in the crypto Market we're ra I'm not allowed
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to talk about our returns but I mean we we have 94% of our of our tokens yeah I mean think it's a venture capital is a
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highly volatile market and then my last case is just give us what you feel is the most compelling use case for
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consumers or or or Enterprise say it doesn't even have to be now but in three years what what do you think the use
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cases are outside of speculation sorry to keep pushing my book but I have seven sections at the end of the book where I
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go through seven uh like deep into seven areas of use cases and I talk about social networking I talk about Finance I
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talk about uh media businesses like nft media businesses um I'll just give you one kind of maybe a flavor of a cool
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idea that I like um as that's one of the sections which is an area called collaborative storytelling and that the
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idea there is it's kind of Wikipedia style is um uh internet fans get together and create narrative universes
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like the next Harry Potter and the next Marvel and they get rewarded with tokens
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proportionate to their contribution um and then they go and they the that the narrative universes they can create can
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then be made into licens and made into movies and comic books and other kinds of things like that's a cool new idea
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that just sort of couldn't exist before you had crypto but there's just like a bunch of there's games I have a section
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on games in the metaverse like I look I think that very clearly we're going to have you know the so-called metaverse I
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know it's jargony is but it is a thing that's going to happen and whether I'm not talking just strictly about VR
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headsets I'm talking about people spending more time in 3D worlds the video games and things like this that's
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just we're going to have more and more people in 3D worlds they're more persistent um um it becomes a bigger
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part of our lives and I think an important question is how is that metaverse structured is it structured
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with like one company owning it like does fortnite own it or is it structured like the web like where there's a bunch
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of different you know like it's an open system and you can add a component to it
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um like that that's another important you know area that I'm focused on um I think as I mentioned before like in a
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world of generative AI um let's talk about your business the media business um you know the internet has operated on
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an implicit Covenant between distribution like search engines and social networks and
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uh websites right what happens in a world where you go to a chat GPT and you just get an answer you don't have to
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click through anymore right so we're very soon entering a world where you don't click through anymore and you
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don't go and I was on the board of stack Overflow for years stack Overflow data was used to train a lot of these systems
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and now stack overflows traffic is way down right so so how do we train how do we create content in the future how do
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we reward content creators so you know I have a section in the book on this about
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like different things people are working on and ideas for like new ways to use blockchains to to create business models
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in in a world of AI systems that give you the answer one of the last things I'm sorry I just noticed Larry fin who
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was a big um detractor of Bitcoin and stuff of course has done an about face and is calling himself a big believer of
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course they have they filed paperwork for an ETF too at blockr so it's I think the finance stuff and the speculation
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might be a little calmer with these new you know it's part of that it'll be part
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of that presumably that will still I know you're not in that area you're in the tools part but as a speculative tool
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of ownership I think it's this will change it quite a bit a lot of people feel like um and then they're limiting
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yeah I think the sort of institutional yeah the institutional people are really piling in a lot more because it feels
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safer and that makes sense that makes sense from a lot of perspectives anyway uh really fascinating book actually and
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we love to we love to own we Chris we're owners um and you know I am you know I'm
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like tired of selling my stuff to other people um anyway again Chris Dixon he one of my favorite Venture capitalists
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and that's a very short list um and uh the book is read write own building the next ear of the internet is
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really worth your while to read it thanks Chris thanks Chris good to see her again yeah thanks God thanks K you
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too