Web3 Revolution: Escape, Faith, Great Migration

Author: Zhou Zhou, Huxiu Technology Group

"I'll go to a (Web3 company) as soon as Byte's year-end bonuses are paid out. A friend from another department at Byte will join me," said Byte employee Zhang Beihai to Huxiu.

As the youngest and the only major internet company that is still rapidly growing with significant opportunities, many employees at ByteDance have chosen to actively give up "jumping" and start exploring new industries. Some are technical staff responsible for Feishu, some are visual designers, some handle TikTok business, and some are "tech giants" who joined Byte in 2014… all are post-90s, mostly post-95s, enjoying Byte's 18-month salary, holding stock options with huge appreciation potential, and indulging in a variety of free meals and unlimited snacks and drinks.

However, this series of top-tier benefits from domestic and even global companies cannot deter their determination to switch careers.

Unlike Zhang Beihai, Tencent's senior product manager Plato is unwilling to wait for the year-end bonus. "I'm not young anymore; I don't want to live a life where I can see the end at a glance." At the end of 2021, Plato resigned from Tencent's headquarters and chose the recently popular creator economy track, officially starting his Web3 entrepreneurial journey.

Huxiu observed that at least six major internet companies, including Alibaba, Ant Group, Tencent, ByteDance, NetEase, and Meituan, have "high P" (senior managers or senior technical talents) who have given up stable high salaries and considerable stock options to actively explore the Web3 world.

The number of former major company "high P" joining the Web3 track is increasing, including: Meituan co-founder Wang Huiwen, Ant Group's technical director Zhao Feng, and post-90s programmer Guo Yu, who joined Byte in 2014 and retired with nearly 100 million in stock options in 2020.

In April this year, Wang Huiwen changed the signature of the Jike App to: Learning Crypto. As a fellow founder of Meituan, he was much later than Wang Xing in focusing on Crypto; back in 2013, Wang Xing had already recognized Bitcoin and invested in it. However, "there's no order in DAO," Wang Huiwen has some new insights into Web3. He believes that blockchain has torn apart the Chinese internet, shifting the main contradiction of the Chinese internet from the conflict between giants and startups to the conflict between classical internet and blockchain. He retired from Meituan in 2020 to start a new track.

Guo Yu is among the earliest Web3 practitioners. He had already been paying attention to Web3 since he joined Alipay in 2011 and shared experiences at Alipay's technology department weekend sharing sessions. After leaving ByteDance in 2020, he rarely studied classical internet anymore and began to focus on researching blockchain technology and applications. Zhao Feng, like Guo Yu, is all in on Web3. As a former architect of Tencent's mobile QQ and product director at Alipay, he entered the field in 2018 and brought many colleagues from Ant Group and Tencent along.

From senior executives to young employees at major companies, the Web3 industry is continuously attracting internet talent. In the first 20 years of the 21st century, the internet may have been the friendliest industry for most young people in China, although people now complain more about its various issues.

Web3 refers to a decentralized online ecosystem based on blockchain technology, and many believe it represents the next stage of the internet. A partner at a traditional investment firm told Huxiu: "The current Web3 industry is very much like the internet in 2000." This statement is being mentioned more frequently.

Looking back to 2000, Baidu, Alibaba, and Tencent had just been established. Alipay would not launch until three years later, QQ Music five years later, BOSS Zhipin 14 years later, KEEP 15 years later, and Douyin, as the "last national-level internet product," would not be born until 16 years later. In fact, most of the internet companies we know today were born between 2000 and 2010. Many of these companies and their products were accompanied by significant controversy at their inception, yet this did not affect their commercial value, which far exceeded that of many traditional enterprises.

So, as the "new generation of the internet," have the latest versions of Baidu, Alibaba, and Tencent emerged?

In fact, in the Web3 industry, some products already possess the "prototype" of national-level mobile products, such as MetaMask (decentralized Alipay), STEPN (decentralized KEEP), Audius (decentralized QQ Music), OpenSea… They have already gained millions or even tens of millions of users globally, and three companies were even named among the 100 most influential companies in the world by Time magazine this year.

Among them, MetaMask is currently one of the Web3 products with the most users. In March 2022, its monthly active users exceeded 30 million, with a growth rate of 42% over the past four months. The company's valuation, ConsenSys, has quadrupled to $7 billion.

Rich products, high valuations, large user bases… all of these evoke memories of the internet during its wild era around 2000.

Escape

"I can see the end." This phrase has surprisingly become the voice of many internet workers today.

Twenty years ago, a group of entrepreneurs introduced various innovative models of the internet into China amidst unclear policies and compliance risks. At that time, the internet had no factional divisions, and there were hundreds or even thousands of companies competing in every niche, with new companies going public every month. A small company could surpass traditional enterprises that had been developing for decades within three to five years; such cases were common.

However, that is no longer the case. In the past three years, there have been few internet companies that, like the current Web3, frequently appear with tenfold or hundredfold valuation increases, allowing investors to achieve hundredfold returns. This may also be one reason why many capital sources are fleeing classical internet and flocking to Web3.

Entering 2022, some capital investments in Web3 can be described as "crazy." According to incomplete statistics from Huxiu, from January 1 to April 26, 2022, Sequoia Capital, one of the largest venture capital firms globally, invested in 17 Web3 companies at a rate of one company per week. Sequoia is considered the most successful early-stage venture capital firm of the internet era, but in the Web3 track, it is facing more intense competition. Its competitor, Coinbase Ventures, invested in 71 companies in just the first quarter of 2022, almost one investment per day excluding weekends. The "war" among capital sources has reached a fever pitch.

Employees at major companies work as hard as their predecessors but have already missed the period of the fastest development for their companies and industries. Even more frightening is that layoffs at various major companies are like a plague, happening one after another with no signs of stopping.

"The development of the internet is getting slower; retirement is fine," a major company employee told Huxiu. She compared internet companies to "retirement homes" for young people, where one receives a salary far exceeding that of traditional industries and enjoys a good working environment, while many employees are caught in endless internal competition, increasingly lacking innovation, and doing a lot of repetitive and meaningless work.

A former project leader at a major domestic company told Huxiu: "When I first joined, I was incubating innovative projects, but over time, the project became heavier, and the entire system lacked innovation, starting to engage in politics. Our boss came from a bank and likes to engage in politics and bureaucracy, which is quite severe. I got used to the previous free and flat working model of the internet, but now the company's environment no longer allows me to gain a sense of achievement."

Since Tim Berners-Lee invented the World Wide Web in 1991, the classical internet has existed for over 30 years. The classical internet is still "young," but compared to Web3, its "oldness" is reflected not only in age but also in its systems, culture, spirit, and various other aspects.

In the Web3 world, there is a "buzzword" called OK Boomer, which can be said to anyone over 22 who disagrees. If you hold a government position, 35 is definitely young, and 50 is just the starting point of a career; if you are in a management position at a large state-owned enterprise, 35 is just the age to start showcasing your abilities; if you are in the internet industry, 35 is the age to be optimized out; and in Web3, 22 may not even be considered absolutely young.

In Web3, experience is the least important; innovation spirit is the most crucial. After all, it is built on blockchain technology, which has only been around for 14 years, so there are not so many rules and constraints. These characteristics make it more suitable for young people.

The trend of Web3 has become increasingly apparent, to the extent that no major internet company dares to ignore it, but they can no longer enter the field as easily as they did 20 years ago.

Huxiu previously mentioned in "Internet Giants' Overseas Battle for Web3" that almost all major internet companies, including Alibaba, Tencent, ByteDance, Ant Group, JD.com, Bilibili, and NetEase, have established teams to explore Web3, and the top three companies: Alibaba, Tencent, and ByteDance have already laid out investments overseas. In a domestic public recruitment channel, Tencent even explicitly stated that it requires job seekers to understand blockchain frameworks like Bitcoin and Ethereum.

Yet, more and more people are choosing to leave major companies.

Migration

A "great migration" is unfolding on the internet.

Entrepreneurs, like stubborn ants, are tirelessly "moving" Web2 (classical internet) products to Web3 one by one. Zheng Xiaoyue is one of these determined entrepreneurs.

He is the CEO of a small to medium-sized internet company in China, having previously led a team of nearly 200 people at NetEase. Now he has developed a product called MetaNotey, going all in on Web3.

MetaNotey (decentralized Weibo)

This product is somewhat like a Web3 version of Weibo and also resembles a Web3 version of Tencent Docs. He attempts to "move" internet products like Weibo or Tencent Docs to Web3, making them more decentralized. "For most internet users, the understanding and usage threshold of Web3 is too high. We hope to become a bridge between Web2 and Web3 for internet users, creating a community platform that aggregates NFT content and facilitates user subscriptions and interactions," said Zheng Xiaoyue.

Plato is also doing the same thing as Zheng Xiaoyue. He worked at Tencent for eight years and decided to resign last year, aiming to "move" WeChat reading and Kindle to Web3.

As a veteran of the Goose Factory, Plato has internally started two entrepreneurial projects during his eight years, growing into a senior product manager. Perhaps due to his love for reading, both of his entrepreneurial ventures in his spare time were related to "books." Once in 2014, he brought in hundreds of authors from Douban to create a paid reading website; another time in 2017, he and friends from Tencent and Tsinghua developed a smart bookshelf. Compared to the self-service borrowing machines in libraries, his smart bookshelf doubled the capacity and was only one-third the size of a library, with costs around 20% of it. You can still see the smart bookshelf developed by their team at the KeXing Science Park where Tencent IEG is located.

Perhaps the first two book-related entrepreneurial projects were not "sexy" enough, so he did not choose to go all in until he encountered Web3.

Compared to internet products, Web3 products share some common characteristics, such as: decentralization, immutability, ownership of data by users, and the ability to buy and sell data. For example, in terms of decentralization, whether it is Weibo, WeChat reading, or Tencent Docs, they all share the common feature of internet products: all data is collected, stored, and used by a single internet company. This centralized internet product often has only one or two nodes, and once compromised, the data is at risk of disappearing.

In the Web3 version of Weibo or WeChat reading, every "Weibo" and "book" published can be minted as an NFT (non-fungible token), and these NFTs exist on blockchains like Ethereum. The blockchain is equivalent to a collection of countless databases, with innumerable nodes, making data difficult to steal or destroy.

The utility of Web3 goes beyond this.

Take NFTs, the hottest track in Web3 last year, as an example. When a Weibo post, an article, or an e-book is minted as an NFT, they become an asset. After you write a Weibo post, you will no longer be unable to know the price of your created content; each Weibo post you publish is equivalent to a product, and as long as someone finds it valuable, it can be bid and traded. This could give rise to a highly developed digital property society, where every piece of data has its own value and price, and everyone can conveniently showcase, trade, and profit from the data they generate.

Twitter founder Jack Dorsey's first tweet from 2006 was sold for $2.9 million as an NFT, but recently, people have not recognized the value of this tweet, so the latest bid for this tweet NFT has fallen to $280, a drop of more than ten thousand times. It should be noted that the current NFT market is still in its early development stage, so some works are pushed to inflated prices, which aligns with supply and demand. As more works enter the market, prices will naturally trend toward normal levels.

The two products mentioned above are the latest attempts made by two Chinese internet practitioners transitioning to Web3, but this is just the tip of the iceberg.

STEPN (Web3 version of KEEP), Metamask (Web3 version of Alipay), Braintrust (Web3 version of BOSS Zhipin)… thousands of internet products have already been moved to Web3 by entrepreneurs. It is foreseeable that many more will follow.

Notable products in Web3

Social, music, writing, finance… every Web3 track is now crowded with numerous entrepreneurial projects.

This scene was once frequently seen in the internet industry.

The internet food delivery platform "Battle of a Thousand Groups" ultimately left only a few companies like Meituan and Ele.me. During the competition period of Mobike and Ofo, hundreds of bike companies emerged overnight. The number of new tracks born in the internet industry every year was countless; now it is no longer the same. However, the Web3 industry is replicating this lively scene.

Just as everyone now has countless apps on their phones, perhaps in the future, everyone will use countless DApps (blockchain versions of apps) every day.

Break the circle! Break the circle! Break the circle!

The decentralization of Web3 essentially seeks a form of extreme equality, which is one of the roots attracting more and more people to participate.

However, technological equality may not be true equality; sometimes it can even lead to greater inequality. Everyone's quality is completely different. Undoubtedly, certain specialized talents are more suited for Web3, although Web3 is continuously breaking circles to attract more forms of specialized talent.

Previously, the Web3 industry had already experienced multiple entrepreneurial waves. A researcher at OKX, Block, told Huxiu: "The birth of Ethereum in 2013 tightly combined blockchain with smart contracts, leading to the emergence of many DApps (blockchain applications); the launch of the 'liquidity mining' play by the lending protocol Compound in 2020 ignited the DeFi market; the NFT Summer in 2021 broke out of the 'Crypto' small circle on the circulation level." These have made significant contributions to the infrastructure and audience attraction of the Web3 industry.

From the invention of Bitcoin to the establishment of Ethereum, to DeFi, NFTs, and now DAOs, each wave of blockchain has attracted a group of entrepreneurs and filtered out a group of people over the past decade.

The emergence of Ethereum has attracted a large number of programmers to participate, the rise of DeFi has drawn in a batch of Wall Street financial professionals, the advent of NFTs has welcomed many artists, and the emergence of DAOs has attracted professionals from various fields.

"I got in touch with cryptocurrencies early on. Tencent employees spontaneously established two WeChat groups dedicated to studying Web3 investments, and both groups were full, but previously we only observed without delving deep until the recent emergence of NFTs and DAOs, which gave us the opportunity to work on projects that could drive the industry," a former Tencent employee told Huxiu.

Those who are newly introduced to Web3 share a common mindset, exhibiting strong vigilance; however, those who decide to go all in on Web3 have various reasons. Some enjoy cutting leeks, making a quick profit and running; some prefer high-risk investments; some are simply attracted by innovative financial models, while others hope to change traditional industries through new technologies and business models.

This space gathers scammers, idealists, speculators, and pragmatists. Under the tide of the times, who is more suitable to grow in the soil of Web3?

A group of venture capital institutions have remained.

Although the Web3 model has indeed impacted early-stage venture capital institutions, a number of forward-looking institutions have stayed, such as Sequoia Capital, a16z, and Coinbase Ventures. Sequoia Capital has invested in half of China's internet, while a16z has invested early in American internet giants like Facebook, Groupon, Skype, and Twitter, and now they openly declare they are all in on crypto. These are the most famous VCs from the Web2 era, and they have chosen to almost go all in on the Web3 track.

Sequoia Capital has changed its "vision" to: helping adventurous individuals build great DAOs

Other new force VCs are also not to be outdone, with competition among some VCs reaching a fever pitch. For instance, Coinbase Ventures invested in 71 Web3 companies in just the first quarter of 2022.

The competition among these investment institutions is extremely fierce, and the "background" of the VCs involved is quite complex.

OKX invested in hundreds of projects in 2021, covering core tracks like NFT, GameFi, and DeFi. Researcher Block told Huxiu: "Traditional VCs obtain shares issued by companies through investment, often only able to exit at higher rounds of financing. Web3 investment institutions obtain tokens from projects through investment, allowing them to sell at any time after the lock-up period, making exits more flexible. Additionally, institutional investment is an important source of funding for startups, giving institutions more initiative. In the Web3 field, project funding sources are diverse, and ordinary people can participate in project investments through public offerings, purchasing tokens, etc., so it is not just investment institutions selecting projects; capable projects also have some requirements for the comprehensive strength of VCs."

"Traditional investments have developed for over a decade, establishing a mature set of value assessment standards for Web2 companies. Web2 is a platform economy, where wins and losses are determined by market share. Web3, however, utilizes technologies like blockchain to create a third-generation internet protocol that is readable, writable, and capable of value transmission, returning the value created by users to the users themselves. This may be counterintuitive for traditional VCs familiar with Web2 investments. To understand Web3 projects, one must first study the principles of blockchain technology, token economics, governance mechanisms, etc. Having a foundational knowledge structure makes it easier to understand the feasibility of Web3 projects," Block said.

In addition, internet elites and Wall Street elites are also "rushing" into Web3.

These two industries have supplied a large number of talents and companies to Web3. From another perspective, the talents and companies from these two industries are the most actively entering Web3.

Financial giants like the New York Stock Exchange, JPMorgan, and KPMG are all trying out the latest plays in Web3. SEC Deputy Chief Economist Scott Bauguess and SEC officials like Justin Slaughter have also joined blockchain companies, which has become a very normal phenomenon. Financial professionals, especially financial elites, are among those who place the most importance on their lineage and resumes.

Historically, internet practitioners and financial professionals have made up the largest proportion of people in Web3, with over 70% of employees in some large Web3 companies coming from the internet. The channels for entering Web3 seem to have been "monopolized" by these two industries until the explosion of NFTs allowed people from various fields to enter Web3 on a larger scale.

Clothing (Nike and Adidas virtual shoes), food (Coca-Cola and McDonald's NFT collectibles), housing (Sandbox), transportation (virtual cars from BMW, Ferrari, etc.), entertainment (NBA, Super Bowl, Disney, Christie's)… NFTs are spreading through traditional industries at an incredible speed, attempting to change them. This has also allowed professionals from other fields, such as painters, sneaker designers, photographers, and jewelry designers, to deeply engage in the world of Web3.

"DAO Thinking" and "Web3 Culture"

Blockchain is a technology, DAO is a system, and Web3 is a culture.

DAO is a form of decentralized organization, which can be understood as a "decentralized company." It is an economic system built on blockchain, where people with the same ideas and consensus can form a DAO. People do not necessarily need blockchain to form a consensus. In the internet world, when people strongly resonate with a video or article, even if it is continuously deleted by centralized institutions, they will spontaneously store and repost it, keeping it alive on the internet. Such behavior actually aligns with the thinking of DAO and the culture of Web3.

However, human spontaneous consensus is fragile. Without the guarantee of technology + system + culture, these consensuses may exist for a night or a moment, but they remain partial, one-sided, and fleeting. People need blockchain + DAO + Web3 to record and guarantee the behaviors and consensuses we cherish.

In 1915, Chen Duxiu published an article in the magazine "New Youth," advocating for democracy (Mr. Democracy) and science (Mr. Science). At that time, the reformers and innovators at the forefront of the era realized that the Self-Strengthening Movement (technology) could not save China, and the Xinhai Revolution (system) could not save China; thus, the New Culture Movement (technology + system + ideological culture) emerged.

The development of Web3 is similar; it differs from other technological forms in that it resembles a "technology + system + culture" amalgamation. If you only engage in "Self-Strengthening Movement" (only develop blockchain technology) without "Xinhai Revolution" and "New Culture Movement," then such Web3 is merely superficial.

This can be seen from the current position of Chinese entrepreneurs in Web3 companies. Chinese entrepreneurs can build the world's largest exchanges but cannot invent culture-focused NFTs like Bored Apes, Azuki, or Cryptopunks.

Azuki NFT

Decentralization is the spirit of Web3 and the core of the internet.

In terms of systems, centralized internet companies are increasingly criticized. Whether it is Twitter, Weibo, or Facebook, they all have the drawbacks of centralized companies, such as arbitrarily browsing user privacy, claiming private data as their own, and big data killing familiar users. These issues are deeply embedded in the genes of Web2 internet companies, making it difficult for them to resolve these problems on their own or merely through regulation.

Recently, an employee of a major company was pointed out for allegedly "snooping" on a startup's work documents. Nearly a month later, the official response is still pending. Such incidents are common and are unlikely to be eradicated. Individuals have no opportunity for resistance or choice; even if a small individual is violated, they will not receive any explanation, and most of the time, people are unaware that their privacy or data rights have been infringed. This is not because internet companies enjoy doing evil, but rather due to their inherent systems. Moreover, once society exhibits a "small government, large company" scenario, the severity of these issues will increase exponentially.

How to dissolve the "evil side" of major companies? Strip them of their overly centralized power.

It should be noted that the Web2 internet is not a completely centralized world; in fact, it is more decentralized than Web1 and the early days of the internet. However, Web2 internet companies generally adhere to centralized thinking.

The emergence of Alipay, WeChat, and Didi has actually provided people with more choices. Before these internet products appeared, everyone could only use products provided by banks, communicate via phone, or hail taxis on the street. The internet has indeed provided new options for people.

From this logic, the decentralization of Web3 manifests in two layers: one layer is social scope; the emergence of Web3 has provided new opportunities for ordinary people and entrepreneurs, making society less monopolized and centralized; the second layer is Web3 itself, whose core idea is to advocate decentralization, striving to decentralize every Web3 product in terms of systems.

People have become accustomed to the lifestyle of the classical internet, believing that every picture, message, and article they publish should be freely and freely shared and circulated. Data equals money, equals power; this is a truth well understood by every large internet company. However, this truth is limited to large institutions. Data is money; large companies can convert data into money and power, but individuals cannot.

Web3 allows data to circulate more deeply. It ensures that the power of data is no longer limited to the state and large enterprises but is returned to every individual.

Every footprint you leave on the internet may seem ordinary, but when aggregated, it forms value. When these data can only be authorized by ordinary people to the institutions that need them, people can earn income through their online footprints and even engage in frequent data exchanges with others.

Web3 attracts the most ambitious capital, the most ambitious young people, and the most imaginative projects. What connects them is a form of trust.

This trust comes from small everyday scenarios.

A Singaporean wanting to buy a house in Australia may need to apply to various departments, taking a week to succeed. However, in the Web3 system, it only takes a few seconds. In the past, to achieve a complex goal, one needed to establish a company; now, one only needs to establish a DAO (Decentralized Autonomous Organization).

Web2 (the internet) allows everyone to see major events happening globally instantly, even from home. Web3, on the other hand, creates an independent global economic system outside the current world system, allowing everyone to collaborate with like-minded strangers globally on complex ventures anytime, anywhere.

In Conclusion

In China, blockchain and Web3 remain among the most controversial industries. Some blockchain company CEOs, even if their net worth exceeds hundreds of millions and their teams number in the thousands, have been harshly criticized by their mothers as "blind drifters."

This ideological conflict has persisted for 10 years and will continue to exist. China has evolved from an agricultural society to an industrial society and then to a digital society in just 30 years. Looking back, each decade has been a revolutionary upheaval.

Children planting rice in that era would not have imagined they would work in factories in the future, as there were no factories in sight; children playing in factories would not have imagined their future jobs would involve staring at screens in skyscrapers, as all they could see were low buildings; and children running between skyscrapers might find their future workplaces in fields, at sea, underground, or even have the concept of work itself dissolved.

Ingrained thinking still lingers in people's minds, but the world is undoubtedly changing. People are "rushing" into this track from the internet, finance, and art industries, integrating blockchain technology into products, incorporating DAO thinking into companies, and connecting Web3 culture to the digital society.

This is a "migration" that has been ongoing for 10 years, and the main force has just begun to set out.