Article Author: 0x9999in1

Source: MetaEra

Recently, the MetaEra Hong Kong Zone has been launched with great fanfare, leading with the series of events titled "Celebrating Two Years of Hong Kong's New Crypto Policy," one of the key components being "High-End Dialogue: Influential Leaders in Hong Kong Web3.0." This issue features an interview with the renowned angel investor Cai Wensheng.

# Profile

Cai Wensheng, who entered the domain business early on, quickly became one of China's most successful domain investors. In 2000, he entered the internet field and founded 265.com in 2003, which was acquired by Google in 2007. After that, he transitioned to being an angel investor, investing in numerous companies such as Baofeng Video, 58.com, Internet Express, Optimization Master, CNZZ Data Statistics, China Webmaster Station, Yiming China, OKEX, and many others, becoming a well-known angel investor in China. He also founded 4399 Games and Meitu Xiuxiu in Xiamen. Regarding the upcoming Web3 era, Cai Wensheng believes the core change of Web3 lies in users being able to control their own data, and that users' data can be monetized, making them owners of platform value. He foresees that Web3 will change society in the next 20 years, just like the internet did, impacting not only finance but also various industries.

# Key Insights

● Everyone should not set limits for themselves and should engage with new things or new assets.

● Web3 is different from Web1 and Web2; it is the third generation of the internet, and its core characteristic is decentralization.

● I believe that Hong Kong's current policies are even ahead of the United States, and there are tremendous opportunities in AI data, financial innovation, trade settlement, entrepreneurship, and technology in the future!

● AI represents an increase in production efficiency, while Web3 represents an improvement in production relationships; the combination of the two will generate greater value.

● Hong Kong is considered one of the earliest sources and cradles of cryptocurrency.

● Looking at Web1 and Web2, true success really requires the accumulation of time; when you invest in the Web3 field, you also need to accumulate time.

● Currently, mainland China is not open to cryptocurrency; I believe those with the conditions should go overseas to develop.

● Entering the Web3 industry through cryptocurrency is not wrong; cryptocurrency is just a starting point for Web3, and the entire Web3 industry has enormous opportunities and space.

# Full Interview

MetaEra: Throughout your early experiences in domain investment, the stock market, Meitu, Bitcoin, and grassroots entrepreneurship, these labels have always accompanied you. What is your attitude towards these labels? Do you like them, or do you wish to transcend them?

Cai Wensheng: Among these labels, I am most satisfied with being an angel investor. Because my early domain investment was a personal endeavor, I have also participated in the stock market, and I started Meitu myself. However, I have invested in over 100 projects, and entrepreneurship and investment have been intertwined, so I am more interested in the label of angel investor compared to entrepreneurship. The early investments I made in 4399 Games, 58.com, and OK Exchange in 2014 all fall under the category of early angel investments.

Secondly, I seek out and invest in these projects, and grow alongside them, which brings a different sense of fulfillment. On the other hand, investing in later-stage projects, where others have already seen the potential, does not provide as strong a sense of achievement. The sense of accomplishment from early investments in 58.com, 4399, and OK Exchange is different.

In recent years, I have seen early investment projects grow, and I am willing to continue investing to surpass my previous investments; the sense of achievement in this phase is different from that of early investments. Moreover, I resigned from the chairman position at Meitu last year because I was concerned about potential conflicts with investment projects, and I wanted to focus more on various investment and entrepreneurial projects.

MetaEra: In your past experiences, you have consistently managed to seize the opportunities in emerging industries. Can you share how you have repeatedly foreseen and grasped future development trends?

Cai Wensheng: I think my insight is quite good. If you succeed once, it can be attributed to luck; everyone will encounter a few opportunities in their lifetime. However, I believe that from my experiences over the past two to three decades, from Web1 to Web2 to Web3, I have always been able to follow trends and opportunities, which is related to my insight.

Why can I achieve this? Because I have not formally attended university; I only completed high school, which allows me to think outside the box. When I encounter new industries, I am willing to try and take risks.

When I first entered the industry, I also faced many challenges and misunderstandings. For example, when I registered domain names around 2000, there were no registrations for domains priced at 60 yuan, and it was difficult to sell them at that time. Later, we learned that some good domain names could sell for tens of thousands, hundreds of thousands, or even millions.

My first entrepreneurial project was 265 Navigation, a website navigation project, which I later sold to Google. At that time, I also seized an area that others did not believe in. Later, I started Meitu Xiuxiu, and many thought it was meaningless to do such a thing, believing that Meitu Xiuxiu was just about beautifying photos, which is a misunderstanding. Initially, Meitu Xiuxiu may have only been for photo editing, but now it has dozens of functions that have been extended to various features.

When I invested in OK Exchange in 2014, my understanding of Bitcoin was also limited; I just thought it was something new, and I was willing to try new things. However, I do not invest indiscriminately because most projects do not succeed; the most important thing is to choose the right direction and see if that direction can develop over the next ten years.

Another key point is that I believe everyone should not set limits for themselves. Sometimes, the more we know, the more we cling to our past successful experiences and perceptions, which are not easy to change.

MetaEra: What is your personal view on Bitcoin investment? What role does Bitcoin play in your investment portfolio, and how does it align with your long-term investment strategy for the Web 3.0 ecosystem?

Cai Wensheng: Here we need to talk about what Web3 is. Web3 is different from Web1 and Web2; it is the so-called third generation of the internet, and its core characteristic is decentralization. Blockchain is the representative technology of decentralization, and Bitcoin is an application of blockchain, but Bitcoin is not everything about Web3.

Web3 will have various trends and combinations in the future, but the core essence remains decentralization. Blockchain is an important foundational support, and Bitcoin is a typical representative of blockchain. Many people enter Web3 through Bitcoin, so Bitcoin occupies a significant position in many people's investment portfolios. However, I personally believe that in the entire Web3 ecosystem, Bitcoin is just one of the assets. We now see Ethereum also becoming an asset, and in the future, there may be more new recognized assets. Bitcoin, as a leader, will always hold great value.

I also entered Web3 by buying Bitcoin. However, from my personal perspective, if I were to develop some long-term investment strategies in the future, I would need to move beyond Bitcoin; not everything is related to Bitcoin. As I mentioned earlier, before 2019, I focused primarily on Bitcoin; after 2019, I paid more attention to the Ethereum ecosystem. Of course, both of these assets have proven their success. As for whether a third ecosystem will emerge, I believe it is already in its infancy, such as the Solana ecosystem, which has gained attention due to the popularity of MEME. However, it is still in its early stages and cannot yet prove that it is the future. So my current view is that both Bitcoin and Ethereum have proven to be viable and valuable, while others are beginning to sprout and develop, and we must pay attention to them.

MetaEra: Can you reveal the current ratio of traditional investments to crypto assets in your portfolio?

Cai Wensheng: Back in 2019, I only invested 10% of my funds in crypto assets, while the remaining 90% was still in traditional asset allocation. Although traditional assets yield returns, crypto assets have higher returns. Today, the value of crypto assets and traditional assets each accounts for 50%. Looking back, if I had invested 30% in crypto assets back then, their current value would far exceed that of my traditional assets.

I believe my previous investments in crypto assets were indeed an attempt, but now it has become increasingly clear that Web3 and cryptocurrencies are the future, and I will continue to increase my investments.

MetaEra: If there are entrepreneurs in the Web 3.0 field seeking your investment now, what types of projects or people would you be more inclined to support? Or, which sectors within the industry are you particularly optimistic about?

Cai Wensheng: Initially, when looking for investment targets, I focused more on projects. As I invested in more and more, I eventually began to focus more on people; I have gone through this process. In the early stages, I leaned towards sectors, but later I found that the initial PPT presented to me and the actual execution results were two different things, so I believe people are more important. If a person truly has the ability, they will continuously adapt and ultimately succeed.

Regarding industry sectors, I believe they must be directions that can develop in the future because if a direction cannot develop, the harder you work, the further you will go. Currently, I am interested in Web3 projects, and another major sector is AI; both are very important sectors. I believe AI and Web3 may closely integrate in the future.

Returning to the Web3 sector, I think we can refer to the development situation of Web1. We all know that the earliest developments were portal websites like Yahoo, Sina, and Sohu, followed by vertical channels such as automotive and real estate, and then chat tools and social networks. However, I found that the earliest profitable sector was gaming; the legendary game was the first to go public on NASDAQ and made a lot of money. Therefore, in the current Web3 field, I personally will examine the gaming sector. On one hand, games can generate quick profits in a short time; on the other hand, Web3 games can attract new users.

Although Web3 games like Axie and STEPN pioneered the idea of earning money through gaming three years ago, they ultimately did not sustain operations, which is related to their economic models. If a game solely focuses on rewards or offers too many rewards initially to attract users, it cannot be sustained. However, this does not mean that this path is unfeasible. In traditional gaming, less than 10% of people spend money, while the other 90% are playing for fun. If a good economic model can be established in the future to allow these players to earn money, that is the core of Web3. So Axie, STEPN, and similar games have made a good start and attempted something. Although they were not very successful, I believe in the coming years we will definitely see better cases; whoever has a good economic model will stand out.

MetaEra: Web 3.0 is undoubtedly a sector full of opportunities. As a self-made entrepreneur who has gone through hardships, how do you view the phenomenon of getting rich overnight in Web 3.0 and the fast wealth dream it creates? What are your thoughts on this magical wealth effect?

Cai Wensheng: This is also why cryptocurrency has always been so controversial. Look at Web1, Web2, and mobile internet; there are no disputes, and everyone accepts them. Because Web1 and Web2 require you to accumulate users through your own efforts and gradually build your business model, it takes time to ultimately succeed.

However, Web3 products are initially related to finance; whether it is Bitcoin or Ethereum, including other projects that need to raise funds, issuing tokens indeed creates opportunities for overnight wealth, but it cannot be sustained. I have seen countless people who made a lot of money through trading or contracts, but because they earned money too quickly, they ultimately lost it just as fast. I have hardly seen anyone who made a lot of money through contract trading and has sustained it until now; of course, there may still be a few people, but I do not know if they can last.

For individual participants, I believe that if you want to achieve great success, you must truly engage in project construction. This is not just about pursuing financial returns; entering through DAO allows you to achieve a sense of participation that is different.

We know about Bitcoin's halving cycle. From the previous two cycles, many people made money, but in the end, most returned to zero. In this halving cycle, you will find that this effect has been shortening. On Solana, tens of thousands of MEME coins may appear in a day, but very few can survive. Secondly, the wealth effect is too short-lived; massive market fluctuations may occur within a few hours or even just a few minutes.

Therefore, for practitioners in Web3, trading in coins is just one aspect; it may have certain benefits, as it creates a network effect and encourages participation. However, if you want to achieve success through trading coins, I think it is very difficult; ultimately, you need to engage in project construction. Even if you are not the founder, being a builder of the project or deeply understanding it will lead to greater returns.

MetaEra: With Hong Kong's opening of Bitcoin spot ETFs, how will this new development affect the strategic layout of (Hong Kong-listed companies) in the digital currency field?

Cai Wensheng: Cryptocurrency is gaining more and more recognition. Hong Kong has always been a financial center and is open to the outside world. We can also see that the Hong Kong government is vigorously promoting the development of Web3, which should be supported by Chinese policies. On October 31, 2022, the Hong Kong Special Administrative Region issued a "Policy Declaration on the Development of Virtual Assets in Hong Kong," and subsequently quickly opened exchanges and spot ETFs, allowing Hong Kong to become a Web3 center again. We can also see that Meitu was the first listed company in Hong Kong to purchase cryptocurrency, and later we saw companies like Boya Interactive and Blueport following suit. I believe more and more listed companies will treat cryptocurrency as part of their asset allocation. I think Hong Kong's current policies are even ahead of the United States in some areas, and there are tremendous opportunities in AI data, innovative finance, trade settlement, and entrepreneurship in the future!

MetaEra: How do you evaluate the development prospects of the combination of Web 3.0 and AI? Which is more important?

Cai Wensheng: I am currently focusing on both Web3 and AI; the two are not in conflict and may complement each other. A good example is Sam Altman, the founder of OpenAI, who is a staunch supporter of Web3. He currently has two entrepreneurial projects: one is ChatGPT, and the other is WorldCoin. Earlier this year, WorldCoin's market value reached 100 billion USD, which is the same as OpenAI's market value established in 2017, but WorldCoin achieved this in just over a year. This indicates that the systems of Web3 and AI are inseparable, representing two directions. AI represents an increase in production efficiency, while Web3 represents an improvement in production relationships; the combination of the two will generate greater value. It cannot be said that one is more important; I believe both are equally important.

MetaEra: Currently, Hong Kong, Singapore, and Dubai are competing to be the digital financial center of Asia. Which do you think has greater opportunities? How will the development of Web in mainland China unfold? Will it open up digital currency trading in the future?

Cai Wensheng: I have in-depth knowledge of all three places, and I currently spend more time in Hong Kong, so I am definitely more optimistic about Hong Kong. From what I understand, Binance's first overseas subsidiary was established in Hong Kong, and FTX also started in Hong Kong. The largest issuer of stablecoins, Tether, was also established in Hong Kong. Hong Kong is considered one of the earliest sources and cradles of cryptocurrency. Due to the pandemic in recent years and the unclear policies of the Hong Kong government regarding Web3, many people and projects in Web3 have been forced to move to Singapore and Dubai. However, after Hong Kong released the "Policy Declaration on the Development of Virtual Assets in Hong Kong" in October 2022, this area has become very open.

These three places each have their advantages. From a policy perspective, Dubai is the most open, but it has inherent flaws: first, the environment and climate are not suitable, and second, there is a lack of basic resources and technical talent. Singapore attracts a large number of developers and financial managers due to its policy stability. However, Hong Kong combines all the advantages: it has more open policies, is close to the mainland, has sufficient basic resources and talent, and is supported by the traditional financial center. I am very optimistic about Hong Kong's successful experience, which may even be conveyed to mainland China in the future. Recently, I saw that a retired vice governor of the People's Bank of China suggested that China should reconsider the development of cryptocurrency. Although this does not represent an official statement, I believe it indicates a trend; mainland China is already rethinking the development of Web3 and cryptocurrency. This is not something that can be achieved overnight; I believe that in the coming years, China will also embrace Web3 and may even reopen digital currency trading.

MetaEra: What advice or guidance can you share with young entrepreneurs venturing into the Web 3.0 field?

Cai Wensheng: I want to emphasize that Web3 is a tremendous opportunity. The technology of blockchain is decentralized, and its manifestation is cryptocurrency, so it is not wrong to enter the Web3 industry through cryptocurrency. However, do not focus solely on cryptocurrency; the entire Web3 has enormous opportunities and space, and many areas can be participated in.

First, even if you are only focused on cryptocurrency, do not just trade for the sake of trading; within this, you can build various things. If you can view it this way, your scope for development will be much larger.

Second, as an entrepreneur, you must recognize your own advantages. Determine whether you are more inclined towards technology, finance, or management, and combine your strengths. If you have the ability to start your own business, that’s best; if not, you can join a team to create together.

Third, looking at Web1 and Web2, true success really requires the accumulation of time. When you invest in the Web3 field, you also need to accumulate time. Of course, it may take less time than Web1 and Web2; it does not require five or eight years, but it still requires time to reach your goals. Wanting to get rich overnight is really difficult; you may gain quickly but also lose quickly.

Fourth, currently, mainland China is not open to cryptocurrency; I believe those with the conditions should go overseas to develop. If one day there is a foundation and China opens its policies, we can return to the mainland to develop and build. Going overseas will be a factor that must be considered when venturing into the Web3 field. In line with the characteristics of Web3, I understand that the future of Web3 may not distinguish between domestic and overseas, nor will it differentiate between countries; this is also the direction all practitioners are striving for, hoping to connect the entire world through Web3. Additionally, the ultimate goal of cryptocurrency may be to eliminate existing national currencies. Although this will take a long time, it is also the charm of Web3 and its long-term direction.