The Danger For Startups In Web 3.0 Fever

A common vision in the tech startup world is certainly not a given. Usually, the diversity of ideas is high, and different sectors and innovators seem to be pulling the world in different directions. 

Every once in a while, however, a breakthrough makes such an impact and inspires so many tech people with influence that visions start aligning and the world starts heading in lockstep in the same direction.

It certainly feels that we are entering such a moment. The blockchain boom laid the foundation for such an alignment, and now more and more people are joining the web 3.0 movement.

Chris Dixon, a partner at Andreessen Horowitz, and a proponent of the decentralized web 3.0 movement, compares the moment we are in to the Cambrian explosion – a period in prehistory between 541 and 530 million years ago characterized by the unparalleled emergence of new diverse species and organisms.

Just as the environment on the planet half a billion years ago led to a boom in biological speciation, the tech environment right now is leading to a boom of new ideas and companies exploring innovative ways to use blockchain.

While this is certainly an exciting time to be a tech startup entrepreneur, the hype surrounding the topic could make some dangers hard to see. The evolutionary framework Chris Dixon is using to illustrate the moment we are in is certainly appropriate because it highlights the dangers just as well as the potential.

It is important to keep in mind that the vast majority of species that have ever walked on earth are extinct. The Cambrian explosion of new blockchain ideas could result in a paradigm shift, but it would also most certainly result in a vast graveyard of failed projects.

This is not the first time something like this has happened in tech. A similar alignment of vision and purpose took place before and during the Dot-com bubble. It is important to keep in mind that while the general ideas and expectations of the tech industry back in the early two-thousands were correct, the enthusiasm of investors and founders outran the pace of the actual change, and because of this a lot of people got burned.

In order to learn from history (and pre-history), it is prudent to stick to the basics and not to throw caution to the wind because of overly enthusiastic groupthink. Avoiding the Dot-com bubble while participating in the web 2.0 trend was the ideal scenario for people in the industry in the early two-thousands. The same is likely true for web 3.0.

A lot of blockchain projects currently are solutions in search of a problem. This is a difficult situation to be in because building something that nobody needs is the easiest way to lose time and money in the startup world.

There are plenty of startup ideas that look good on paper, yet once they clash with the real world they fail to gain meaningful traction. Validating the idea and product is the fundamental step to building a successful startup, and ignoring it is a great way to increase your chance of failure.

In summary – we could be standing at the beginning of a new great episode of value and wealth creation from tech. At the same time, we could be standing amid a bubble – the two statements are not mutually exclusive. Throwing away the startup basics because of a fear of missing out is simply a bad strategy.