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It's overwrought takes like this that fail to see the real issues at play. Many of those projects were all good faith efforts and I haven't seen a shred of evid

It's overwrought takes like this that fail to see the real issues at play. Many of those projects were all good faith efforts and I haven't seen a shred of evidence that a16z was mass dumping tokens (most articles confuse a16z's first crypto fund, which did well, with the funds that were deployed in 2020/2021). With all that said, a16z (and other top VC firms) are at or near the top in the list responsible for inflating the crypto bubble. 1. They weren't aligned with their LPs. The economics fundamentally changed for them as their funds 10x'd in size and they started bringing in $100M+ in management fees. They should have been asking themselves if they could responsibly invest anywhere near this amount in a crypto market with very few real users, but they decided to cash the checks instead. 2. They used social media to promote these tokens to retail and lobbied to reduce barriers for more retail investment. They were more than happy to sign off on plans for their portfolio companies to sell what were basically securities in seed companies to retail investors at orders of magnitude inflated prices. Then, they used their own Twitter accounts and podcast appearances to play up a potemkin digital revolution and raise their next fund, all while retail investors took a bath. 3. Due diligence was universally awful. They might have avoided most of the worst frauds, but plenty of investments were in unsustainable mechanisms where the collapse could have easily have been predicted.

deleted 4y ago
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yunohn 4y ago
> I haven't seen a shred of evidence that a16z was mass dumping tokens Why do you assume their entire investment was just tokens? No other possible way to cash out?
dinkumthinkum 4y ago
They were all good faith efforts? That is an extraordinary claim. How many crypto-scams do we need to see a pattern? I think scam is almost too banal a word; they are complete hucksters taking advantage of naive people (as well as greedy people similar to them). What Axie Infinity brought about in places like the Philippines is just repulsive.
EGreg 4y ago
It doesn't have to be using tokens. People like Adam Neumann, Travis Kalanick and Elizabeth Holmes were being propped up by VCs long before any ponzi schemes adjacent to Web3 appeared. Venture Capital firms can prop up money-losing economics for years (called "reducing friction"), and then dump the stock on the public (called "an exit"). By the time the public realizes there isn't an amazing business model there, they're the proud new owners of stock. Then they proceed to replace the management and pressure the new managements to extract rents from the ecosystem, endlessly, to justify the expected endless growth in stock prices. If anything, true utility tokens (ones pegged to the dollar) can eliminate speculative bubbles, and let the network be owned by the participants. PS: Celsius and FTX and Binance are not in fact decentralized protocols. They're middlemen, the very thing Web3 smart contracts were supposed to eliminate. UniSwap, Aave and other protocols are chugging along just fine, and the smart contracts are NOT capable of rugpulling people. Even Dogecoin and other altcoins aren't. Everything is designed to be owned by the participants, with no central control. What happened was that Ethereum lowered the barrier to creating these smart contracts, so we got a lot of crap just like PHP. But it's actually worse than that -- opportunists created centralized services where you can merely deposit tokens and withdraw them, and that's as far as they get when it comes to "Web3". It's too bad that people blame "Web3" and decentralized networks for stuff done by centralized players who build shiny interfaces that LARP as a decentralized protocols. It's like blaming all gold when banks get robbed, instead of realizing the problem is the centralized banks storing your money, not the gold itself.
- JumpCrisscross 4y ago
  > Venture Capital firms can prop up money-losing economics for years (called "reducing friction"), and then dump the stock on the public (called "an exit") SPACs come the closest to what you describe. Even there, the burden of evidence and disclosure is markedly higher than anything in crypto.
  - EGreg 4y ago
    No, VCs not SPACs. They say “reduce friction” and “fail fast”. They do multiple rounds injecting capital into companies that lose money for years, and sometimes do not ever generate any profits or even any revenue. David Heineier Hansson and thr Basecamp guys for example have railed against this for two decades. Example of a huge fund now deemed worthless by investors, who invested in some of the top Web2 projects (NOT Web3): https://www.forbes.com/sites/alexkonrad/2020/04/05/exclusive-interview-masayoshi-son-talks-wework-vision-fund-softbank/ https://www.forbes.com/sites/alexkonrad/2020/04/05/exclusive... Actually, if that’s all VCs and Wall Street did, then that would be fine for society because they’d basically build useful money-losing businesses that served a ton of people. But some VCs go further. They encourage companies to build a monopoly and extract rents forever. Most of Big Tech ended up this way, and there is a reason many people are not happy. Peter Thiel is open and honest about his opinion that “competition is for losers, build a monopoly”: https://onezero.medium.com/competition-is-for-losers-how-peter-thiel-helped-facebook-embrace-monopoly-9a3dd2be1c20 https://onezero.medium.com/competition-is-for-losers-how-pet... This has a huge effect on society. Take the Facebook example… Mark Zuckerberg was programming geek who liked Open Source. Microsoft offered him $1 million for a producy he built in High School. He refused, and put it up as open source. In college, he hacked together projects like Facemash and Facebook using PHP. What people don’t know (and what was left out of the movie) is that Mark Z wanted to create Wirehog, a (gasp!) peer to peer, decentralized file sharing system. I was at the first TechCrunch Disrupt when Sean Parker was interviewed on stage. He proudly recounted how “we put a bullet in that thing”: https://techcrunch.com/2010/05/26/wirehog/ https://techcrunch.com/2010/05/26/wirehog/ We being him and the VCs. You see, Sean Parker once upon a time was ALSO a guy who built a successful product that was by and for the people — Napster. And it also went up against a different industry that liked monopolies — er I’m sorry, intellectual property. They formed associations like MPAA and RIAA that sued Napster and destroyed it. But Parker learned the VC gane after that. He started Plaxo. He discovered Mark Z the way talent scouts discover artists for record labels, and brought Mark together with Peter Thiel. Clarion Capital turned $500K into $5 Billion. So they took an open source-loving software-hacking geek like the ones you should celebrate in Hacker News, and turned him into a corporate golden boy who runs a monopoly, bullies and buys up the competition. And you are conditioned to support that so that you, too, can get funded by the VCs. Closed databases and recurring revenues are good. But the Open Web with Web3 and open protocols without middlemen — they’re bad because some middlemen — the very phenomenon Web3 smart contracts are supposed to replace, did what they usually do: amassed money and power from millions of people promising instant gratification and then started having their own private ideas about how to use that money and power. The thing is that when a VC-funded company has an IPO, the shareholders push Facebook to extract rents forever. And the VCs groom them to do so. So if the VCs are good at their job and the company becomes a wall street darling, that essentially means the investors will be extracting rents from both sides of the ecosystem, and encourage monopolistic practices and intellectual property enforcement lest people defect to open source marketplaces and, say, Uber drivers keep more of their money. And as for Peter Thiel? He went on to build precrime software for the government. Tell me where I’m wrong.

deleted 4y ago

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yunohn 4y ago

> I haven't seen a shred of evidence that a16z was mass dumping tokens Why do you assume their entire investment was just tokens? No other possible way to cash out?

dinkumthinkum 4y ago

They were all good faith efforts? That is an extraordinary claim. How many crypto-scams do we need to see a pattern? I think scam is almost too banal a word; they are complete hucksters taking advantage of naive people (as well as greedy people similar to them). What Axie Infinity brought about in places like the Philippines is just repulsive.

EGreg 4y ago

It doesn't have to be using tokens. People like Adam Neumann, Travis Kalanick and Elizabeth Holmes were being propped up by VCs long before any ponzi schemes adjacent to Web3 appeared. Venture Capital firms can prop up money-losing economics for years (called "reducing friction"), and then dump the stock on the public (called "an exit"). By the time the public realizes there isn't an amazing business model there, they're the proud new owners of stock. Then they proceed to replace the management and pressure the new managements to extract rents from the ecosystem, endlessly, to justify the expected endless growth in stock prices. If anything, true utility tokens (ones pegged to the dollar) can eliminate speculative bubbles, and let the network be owned by the participants. PS: Celsius and FTX and Binance are not in fact decentralized protocols. They're middlemen, the very thing Web3 smart contracts were supposed to eliminate. UniSwap, Aave and other protocols are chugging along just fine, and the smart contracts are NOT capable of rugpulling people. Even Dogecoin and other altcoins aren't. Everything is designed to be owned by the participants, with no central control. What happened was that Ethereum lowered the barrier to creating these smart contracts, so we got a lot of crap just like PHP. But it's actually worse than that -- opportunists created centralized services where you can merely deposit tokens and withdraw them, and that's as far as they get when it comes to "Web3". It's too bad that people blame "Web3" and decentralized networks for stuff done by centralized players who build shiny interfaces that LARP as a decentralized protocols. It's like blaming all gold when banks get robbed, instead of realizing the problem is the centralized banks storing your money, not the gold itself.

JumpCrisscross 4y ago
> Venture Capital firms can prop up money-losing economics for years (called "reducing friction"), and then dump the stock on the public (called "an exit") SPACs come the closest to what you describe. Even there, the burden of evidence and disclosure is markedly higher than anything in crypto.
- EGreg 4y ago
  No, VCs not SPACs. They say “reduce friction” and “fail fast”. They do multiple rounds injecting capital into companies that lose money for years, and sometimes do not ever generate any profits or even any revenue. David Heineier Hansson and thr Basecamp guys for example have railed against this for two decades. Example of a huge fund now deemed worthless by investors, who invested in some of the top Web2 projects (NOT Web3): https://www.forbes.com/sites/alexkonrad/2020/04/05/exclusive-interview-masayoshi-son-talks-wework-vision-fund-softbank/ https://www.forbes.com/sites/alexkonrad/2020/04/05/exclusive... Actually, if that’s all VCs and Wall Street did, then that would be fine for society because they’d basically build useful money-losing businesses that served a ton of people. But some VCs go further. They encourage companies to build a monopoly and extract rents forever. Most of Big Tech ended up this way, and there is a reason many people are not happy. Peter Thiel is open and honest about his opinion that “competition is for losers, build a monopoly”: https://onezero.medium.com/competition-is-for-losers-how-peter-thiel-helped-facebook-embrace-monopoly-9a3dd2be1c20 https://onezero.medium.com/competition-is-for-losers-how-pet... This has a huge effect on society. Take the Facebook example… Mark Zuckerberg was programming geek who liked Open Source. Microsoft offered him $1 million for a producy he built in High School. He refused, and put it up as open source. In college, he hacked together projects like Facemash and Facebook using PHP. What people don’t know (and what was left out of the movie) is that Mark Z wanted to create Wirehog, a (gasp!) peer to peer, decentralized file sharing system. I was at the first TechCrunch Disrupt when Sean Parker was interviewed on stage. He proudly recounted how “we put a bullet in that thing”: https://techcrunch.com/2010/05/26/wirehog/ https://techcrunch.com/2010/05/26/wirehog/ We being him and the VCs. You see, Sean Parker once upon a time was ALSO a guy who built a successful product that was by and for the people — Napster. And it also went up against a different industry that liked monopolies — er I’m sorry, intellectual property. They formed associations like MPAA and RIAA that sued Napster and destroyed it. But Parker learned the VC gane after that. He started Plaxo. He discovered Mark Z the way talent scouts discover artists for record labels, and brought Mark together with Peter Thiel. Clarion Capital turned $500K into $5 Billion. So they took an open source-loving software-hacking geek like the ones you should celebrate in Hacker News, and turned him into a corporate golden boy who runs a monopoly, bullies and buys up the competition. And you are conditioned to support that so that you, too, can get funded by the VCs. Closed databases and recurring revenues are good. But the Open Web with Web3 and open protocols without middlemen — they’re bad because some middlemen — the very phenomenon Web3 smart contracts are supposed to replace, did what they usually do: amassed money and power from millions of people promising instant gratification and then started having their own private ideas about how to use that money and power. The thing is that when a VC-funded company has an IPO, the shareholders push Facebook to extract rents forever. And the VCs groom them to do so. So if the VCs are good at their job and the company becomes a wall street darling, that essentially means the investors will be extracting rents from both sides of the ecosystem, and encourage monopolistic practices and intellectual property enforcement lest people defect to open source marketplaces and, say, Uber drivers keep more of their money. And as for Peter Thiel? He went on to build precrime software for the government. Tell me where I’m wrong.