Chris Dixon - Why Crypto Is Still Critical to Our Future

It's great to be here. A lot of old friends are here. I just saw Dennis and Rufus and John Borthwick. Um, I spent many years in the New York tech world. I still consider New York my real, really kind of my home. Um, and was here for a very long time. In the 2000s, I think, were particularly, for me at least, a special time in my life in many ways but also my career. Um, just actually for those who—I don't know if you've had a chance to read the book yet, probably not, it just came out. But um, there's a lot of it talking about that era, the kind of Web 2 era, and that was—I spent that time here with people like John and were involved with a bunch of projects, and it was just a really exciting time. Um, should I just jump into this?

Okay. I have a problem of concision. I was doing like CNBC and things this week, and the problem is every time I speak, I go on for 45 minutes. So, I will try very hard to not do that today.

I've gotten these funny reactions. Like I was at—I just talked to The Economist, the podcast, and she was like, 'I did not expect the book to be like—I think she said it's like so academic or something.' I don't know. I think like the expectation was you run a fund and it's going to be like, you know, 'Seven Habits of Successful People' or something, a motivational advice or something. It's not that. For those, you know, when you read the book, it's not hopefully it's not academic, but it's definitely, you know, like a book that actually makes an argument. And I spent a long, long time on it, which I don't know if you want to go into, but a very long time on it and it's, you know, footnotes and the whole thing. But a lot of it's my lived experience of being—I spent my career on the internet and I wanted to share that experience and then of course tell the story of how I see the future through that lens.

And maybe I won't bore you with all my personal details, but I do think it relates to the book and why I'm doing this and why I care about these topics. So, I was in college in New York in the '90s and was in actually a philosophy program and thought—my parents were academics and thought I would be an academic. And then I started reading like Wired magazine and all these other kinds of, you know, I'd meet people working in the internet and sort of—this is like sort of the late dot-com bubble in the late '90s. And for me it was a real epiphany. It was this idea—a couple of things. I mean, one, I didn't know you could sort of—this world existed where you could go and build products and be an entrepreneur. And I just, you know, I'd come from Ohio. My parents were English professors. And it was just like, wow, that seems like a cool—like what you were doing.

I think I probably read about you and a bunch of other folks. And I was like, wow, that's just like kind of a cool thing you can do. I thought because I kind of had this cartoon version of business that it was like all you—I don't know, people in suits selling stuff or something. And like you could actually like invent stuff and it sounded sort of adventurous and swashbuckling and cool or something. And so that was part of it. But a lot of it was the internet was like, whoa, this is—this, you know, it kind of in some ways it was inevitable that we'd link all the computers in the world together, right? I mean you sort of think about, okay, you got all these computers, why wouldn't you connect them, right? And people had like labs, like LANs, and they connected computers. But the fact that we connected them in a decentralized way, right? That there was no company in the middle was this really remarkable thing. Yeah. Um, and for me that was—I mean I sort of see myself as almost an accidental technologist in the sense that I really fell in love with this idea. Um, I think a lot of—I think maybe you did. We were talking earlier.

John Perry Barlow.

And it really felt revolutionary. It felt like this revolutionary fervor and I—and like maybe I'm naive, but I bought into it. Like I really thought it was powerful. Um, and so I, you know, and then but then there was this—there was this—but if you kind of go back and like Internet Archive and look at the '90s web, it was very—it was what I call in the book skeuomorphic. And so skeuomorphic is a term that Steve Jobs would use to refer to design when you see like the grainy bookshelf in the book app. Um, you know, it's sort of design that makes you look like something older. And I—other people have sort of started using the word skeuomorphic in a broader sense to refer to when a new form of media comes along, you often will kind of port over tropes and design patterns from prior forms of media. So early films were like filmed plays and then over time they developed kind of the close-up and the establishing shot. And this is very—I think like probably Marshall McLuhan and all these media theorists talk about this pattern, right? You have the first era of media is always skeuomorphic. I don't know if they use that word, but like sort of—I think they have another word for it in media theory. I don't—but the '90s web was like this in the sense that it was kind of a one-way medium. This is why Read Write Own. It was read-only. It was you would consume—so you would consume stuff. So like the websites looked like magazines or brochures and there was some like submit buttons and things.

Saying the early web was like that, right? So you sort of take—because people are like, what, this thing's too new. It's almost—you almost do this thing because it's otherwise it's like you have future shock, right? It's like jarring. Yeah. Right. Because like people come along and they're like, what is this thing? It's on the computer. It's like hit a button and oh it's a magazine. Okay, I kind of get it. Right. [snorts] And so that was the '90s web and I got it sort of early 2000s and the crash happened. And for those again who weren't there, it was a little bit like what you're describing now with the, you know, smoldering ruins. Like it was ugly. Uh, people really—it sounds absurd now but people really thought it was—they didn't think it was over. It's different, right? Like the numbers were still going up. I mean, first of all, it was all mostly narrowband, meaning you had to dial up, like you didn't have broadband. Broadband penetration wasn't very high. But um, but it was the idea that it would be a business was the kind of thing people were very skeptical of. That—yeah. Yeah. It'll be this thing you use, you'll buy your plane tickets, you'll email, but all of these visions of the '90s that it's going to revolutionize the planet and revolutionize business, that was all overhyped, right? You remember this? Oh, yes. People that weren't there, like they think, oh, you're exaggerating it. As everyone knew the internet was inevitable—no, it was not. It was really bad. Like it was like very negative sentiment, right? And I guess I was at the time just naive enough or whatever, I was excited enough about it and got into it. And so—and then that era which I call—which I don't call it, people called it the Read/Write era, that's not my phrase. They also called it Web 2. But those were the two kind of competing words for it. In fact, a very popular blog at the time was called The Read/Write Web. Um, and the idea was, okay, we're going to pull ourselves out of these smoldering ruins. We—and this was—John remembers this and I think Dennis—Dennis, this when you started Dodgeball, right? I mean, exactly. I think it was 2001 or 2002, right? I think—yeah, NYTP at NYU was like kind of a hub of this. There was a whole kind of little movement. Tumblr was a little bit later, but the idea is, okay, let's pull ourselves out of these smoldering ruins, right? Let's build something cool and let's do it by embracing what is special about this medium. And what's special about this medium was that it was a two-way medium, that you could—that it was that you could create—you could not only democratize the consumption of information, you could democratize the publishing of information, right? And so that was—and that began as blogging. Um, and that was, you know, you'd roll your own blog with RSS and these other protocols. Um, and then blogging—I think of it as blogging had like different genres within it. Um, and there was sort of microblogging, like link blogging they call it. There was tumble blogging which is like photo blogging. There was long-form blogging, right? And I think of that as kind of the genealogical tree, the primordial soup through which you can sort of trace all the modern social networks back to these different, you know, kind of archetypes of blogging culture of the early 2000s, right? And [snorts] then you had sort of like you often have in technology movements, you had the purists of like the blogger types and then you had the pragmatists who were like the Zuckerberg types, right? Who sort of took the—Bill Gates who kind of saw what the purists were doing and said, 'No, I'm going to productize this.' And, you know, took what—the bloggers were the indie bands in Brooklyn. And then, you know, Mark Zuckerberg was the—I don't know, the metal band in Milwaukee playing the stadium or something, right? Like he took this kind of movement and made it mainstream. I probably butchered that music reference. I'm not a music person, but [laughter] But um, but you know, he sort of like took it mainstream. And so that was just—and anyways, this is all a long-winded way of saying for me this was a very magical time in New York in the 2000s. And New York—a lot of it was happening in New York, um, with like Tumblr and Etsy and Kickstarter and, you know, and like Union Square Ventures and what Dennis was doing with—I don't know if Scott Heiferman, someone said you might be here, Meetup. Um, [snorts] and Betaworks was a central hub for all of this. Um, so anyway, so that—yeah, I'm going on. And then we had—and then we had this acceleration of corporate networks, right? We had—yeah. Yeah. We had this—something happened that we didn't see coming, right, with corporate networks. And this is what—and this is what took me a long time to diagnose this and I try to do this in the book and this is in the beginning of the book. Um, I almost think the book—you know, you can almost if you—even if you don't believe all the arguments I make in the sort of second half of the book about blockchains and you just don't believe and you're a skeptic, fine. I think in the first part I would argue I have a correct diagnosis of what sort of—how the internet became centralized. And so that's sort of the first part is like what went wrong in my view. But yeah, so the way I view it is there was sort of this Faustian bargain in the 2000s, which is we—on the one hand we did get this vision realized, which is the web became truly democratic, truly, you know, anyone could publish, right? Um, and look, and it's amazing. Like the fact that if you time traveled back to 2002 and said to somebody, you've got five billion people with supercomputers in your pockets and you can push a button and tap into all of global knowledge and it's, you know, basically I think it's like $10 to get an Android phone and you can get free internet service—like it's a remarkable thing that happened. Like I mean I think the computing industry did a lot of good and I don't want—the book's sort of critical, so I want to make that—I try to make that really clear. I'm not—I generally think that technology has been a very positive force in this way. But I do think there was sort of this trade that we made, which is in order to get that result, we did that by handing power over to what turned out to be a very small set of big companies. Right? I mean we didn't know that back then. And specifically there was a moment in the mid to late 2000s, I believe, where it was still a question as to whether social networking—which really is the most important application in terms of just time spent online, money spent online—there was a moment, probably up until 2007 or 2008 or so, where that could have been an open protocol. Specifically RSS was a very popular protocol which at one point was more popular than Twitter and Facebook, which was an open way to do social networking, right? And you could imagine there's an alternative history on Earth 2, they are using, you know, in 2024 we're using TikTok and everything else, but they're all just different payloads being fed through an RSS protocol. And on Earth 2, I think I would argue in the book, I argue you have a very different result in terms of particularly the economic result. That's really my focus in a lot of the book, which is because of the fact that you had these five companies—there's—so networks have what are called take rates. And the take rate is the percentage of the revenue that's sort of flowing through the network that's taken by the tollkeeper, by the centralized entity. And the social networks today—the top five social networks had about $150 billion in revenue last year and they have 100%—outside of YouTube, YouTube has a 45% take rate, the rest all have 100% take rates. Which means you have sort of these—the way I think of it is like you have these roads, you know, like imagine the internet like the highway system and all of this money flowing around in commerce, but then these incredibly high tollkeepers. And it's because of the way the system's set up. It's opaque. You don't realize it. So, you know, you wake up in the morning and you go to TikTok and you don't go for TikTok's content. It's not like Netflix where they pay for the content, right? You're going to see some other user and then TikTok is putting ads up and TikTok is making tens of billions of dollars and they're not sharing—they have these diminutive creator funds which are sub 1% of the revenue which I think are immaterial. But basically they aren't sharing the revenue. But because you don't really see any of that money, people don't fully realize the trade we made, right?

So yeah, so on the one hand it was a fantastic thing that happened, right, the internet and all the things that we enjoy. And on the other hand I think the trade was now we have five or so companies. And then just—sorry, one last thing if I could just—I would argue that AI and all the other kind of trends—which is I'm very positive on AI, I think it's an amazing thing. But I do think that we are headed—I worry we are headed to a world where it's getting so consolidated that it's going to become like '70s broadcast TV or something where you really have three channels. And even now, like there's further things. Like for example, all the social networks are now punishing you if you link out to the web. I don't know if people follow this. Epic and Apple are having this big lawsuit about linking out and paying out. I think very soon you're going to have just really—this whole—I mean so they basically have switched from like fighting over market share to fighting over keeping you in the app most of the time. And then with AI, you know, they—again, I'm pro AI. I think it's—I well, I'm pro open source AI, I should say. I'm a very big believer in open source. But I'm generally pro AI. But I think look, AI tends to favor companies that are well capitalized and have lots of data and that will play. You know, Mark Zuckerberg just said they bought 350,000 H100s, which is $10 billion of GPUs. Now, and to their credit, they are the one big tech company open sourcing. But the point just being that this will just continue to consolidate. And so the question we have, I think, before us is, is that a good thing or not? You know, maybe there's policy solutions for it. And I'm not—I think that's a reasonable conversation to have. I also would argue there are technology solutions. And sort of the core argument to my book is that blockchains, which as you pointed out have been so maligned and associated with, you know, grift and casino culture and fraud and everything else, I argue that essentially they are tools and they can be used for bad as we've seen, but they can also be used for good. And the point of the book is to make that case.

How much did it—how much venture did you—remember like boo.com raised $100 million and they spent—you spend $100 million to get a website up. Like people would do that.

Well, I think it's—I say necessary, like I think there are, you know, for example, maybe you could achieve some of these things through regulation and policy. I don't know. I haven't seen good proposals for that. But for example, people have ideas around data portability where you can export your names from one social network to another. So I don't want to dismiss all the other possibilities. And look, new things could come along. Um, so maybe if you want me to, I can jump into what I think of blockchains. Or maybe just right before, can I finish the kind of motivation side? So, yes, so I've been involved—so I got interested in blockchains. I sort of put my toe in the water about 10 years ago and then got more and more interested in it. And um, was obviously very disappointed a few years ago to see what happened, you know, with FTX and all these other kind of fiascos because this was just obviously not why I was doing this. And then for me that was a kind of a crossroads moment of like, do you kind of give up and like maybe this has just been kind of burned and like, you know, as you've said, this is an interesting time.

I was very frustrated. I mean, I was very frustrated. I was very frustrated with it. Um, for sure. Um, and well, look, I thought of it two ways. On one hand, I kind of went back and forth. I'm like feeling, you know, depressed. Um, and then the other side of me said, well, you know, maybe this is an incredible opportunity because, you know, it's not very often in technology—I've never seen a situation in technology where the gap between what I believe is the truth of the technology or the potential of the technology and the perception is so wide, right? Um, so like AI, it's, you know, I think AI is awesome, but most of the world does. And maybe I, you know, people will write a book and you'll have like a different take on it, but it's not going to be that wide, right? It's like it's really awesome or super awesome or whatever. But like it's not, you know, it's not like half the world saying it's—I don't know, maybe we'll see what happens. It might get politicized to the point where in the future where it is that controversial, but right now it's not. Um, but with this, it's clearly this big gap. So, right, there's two ways to approach it. One is you get kind of depressed about it, and the other—I tried to look on the bright side. I was like, has there ever been an opportunity like in my career? Will I ever have a chance to try to close that gap? And specifically to write a book that—so that's what motivated me. I was like, let me write a book that explains my view and, you know, why I'm not—why I'm not sort of, you know, hopefully not completely crazy. Um, and tries to make the case as to why this technology that appears in many ways bad actually can be quite good. So I tried to flip it around. That was my motivation. So I kind of—and also frankly it was a test for me because I think, you know, it's one thing to believe something, I found personally, but it's another thing to write it out in detail and have to force yourself. And I think if you read the book I hope you'll find that like I really don't make claims that I don't—I hope you find this—like every claim I make I walk through examples and I'm very, very specific. Um,