Big Technology Podcast - Web3 And The Future Of The Internet — With Box CEO Aaron Levie

Episode Date: January 5, 2022

Aaron Levie is the CEO of Box, a $3.95 billion publicly-traded tech company. He joins Big Technology Podcast to discuss the rise of Web3 — a crypto-based vision for the internet — and where it can go wrong. Levie raises several important questions about where the Web3 theory and promise might slam into obstacles in the real world. Listen and you'll get a more nuanced view of Web3, something that goes beyond "This is the future" or "This will never work." Support this podcast at — https://redcircle.com/big-technology-podcast/donationsAdvertising Inquiries: https://redcircle.com/brandsPrivacy & Opt-Out: https://redcircle.com/privacy

Hello and welcome to the big technology podcast, a show for cool-headed, nuanced conversations of the tech world and beyond. I have been really, really excited to host this conversation ever since Aaron Levy, agreed to participate. He's the CEO of Fox helped kick off the show when we started back in 2020. We're now in 2022. The show still exists. It's a small miracle. Thanks for everyone for being here. Thanks, Aaron, for helping us kick the dang thing off. And now we have a really important discussion because the hottest topic in tech recently has been Web 3 and crypto. Passions are inflamed. A lot of the discussion is

happening on Twitter. I think that you've done a really great job. bringing nuance to the discussion there and you know here the podcast our idea is to unpack some of the most important difficult topics in the tech world and add a layer of nuance of complexity that doesn't exist often in 280 characters so maybe we can keep pushing your mission forward that's a long way of saying welcome to the show welcome Aaron great to have you thank you it's there's not a lot of nuance in this particular debate so I don't know that we'll make that makes more progress in this call, but I'll do my best. Okay, sounds good.

I'm going to press you. I've been listening to the podcast, man. I've been drinking from the fire hose. And so hopefully I'll do my best to advocate for the Web 3 community's beliefs, even though I don't necessarily hold their views myself. Actually, I feel like I can advocate for their beliefs as well. Okay. I'll make the pro case.

great why don't we start there okay so the pro case um and by the way can we also i think just for for table setting you know as why don't we as you start to get into the pro case just to find what web three is because it is it does seem like jargon that's replaced crypto but for some reason that there's this you know belief in it that it's the next evolution of technology so why don't you define it and then go into the bull case sure sure well let me let me first caveat um that that I should not be responsible for for I probably won't you know do it full justice and everybody will find some flaw with any way you try and define to find to find something that is this new and nebulous but my interpretation of the definition and the philosophy is that

because of a new set of technologies we have in the form of blockchain technologies we are able to build a trustless decentralized internet that lets us be able to have shared data and logic and rules and contracts in kind of quotes and with the ability to add money into that so you can effectively transact with people and things in this sort of trustless decentralized way. And it's actually an incredibly, I think, fascinating vision. and one that is an exciting philosophy about how the future could work. But I believe that there are possible sort of pretty extreme challenges on a technical level to being able to achieve many of the desired outcomes,

or at least the outcomes that people have sort of projected onto this vision of the future that I just think we should be talking about so we can actually understand what we're building and how it might turn out. So the vision, I think, is incredibly exciting. it's a very exciting philosophy of, you know, you don't need corporations anymore to power the internet. It's an internet that we all collectively own. And, you know, I think it would be hard to say, why would you not want to be a part of that philosophy? So the philosophy, I think, is very strong. I think the challenges that it'll get met with, you know, a number of complexities

that I've, you know, just been trying to throw out into the wild, mostly just met with with more and more kind of arguments online. So, but that's, that's the conversation right now. Yeah. And I think one of the reasons why I want to have you on the show is because I think that some of the challenges that you've brought up to this are, like, fairly legitimate. And, you know, they sort of explain why we haven't seen many, any web three applications so far.

And so I do want to get into them. For the start of this conversation, you know, I think that it would be great to just kind to talk about some of the applications. So the first application that we have in this Web3 world is money, right? And that's come in the form of Bitcoin. Yeah. Yeah. And I think actually it's actually really important that we start with money because I sort of posit that actually money is the use case of crypto and that actually the challenge is trying to extend past money is where we start to run into these really hard, insurmountable problems. And the reason why money is the sort of kind of product management Silicon Valley terms, the product market fit of crypto is because

it shares a bunch of really useful characteristics. Money is a sort of a global concept that everybody can understand. I want to give you one unit of value for something. And so we can exchange it incredibly easily. It's helpful that it's sort of censorship resistant. So nobody can turn it off. No government can take it away. Nobody can kind of pull it away from you. You need to have an architecture that, again, nobody can corrupt and possibly disrupt. So you have to be decentralized in the technology fabric. And it's really, really low payload. Like the actual amount of data to transfer money back and forth is incredibly small. So it means that you don't really congest this decentralized network very, very easily because money is.

It's a small amount of data that has a high amount of value to us as we move it around. What I'm kind of running into as a challenge is that when you try and extend that use case from money to other things, possibly a tweet or other kind of application data where we're now talking about data portability being built on a blockchain, I think you start to run into a new set of issues, which is the data itself actually doesn't have a lot of value in it of itself. the data is valuable because it's a part of an application and that application needs the ability to kind of iterate quickly and innovate quickly to be able to serve its customers but by being as a virtue of being on the blockchain is actually going to possibly get less innovation because of the fact that you are dependent on other developers

that are going to be building on that exact same sort of data model and architecture that might have different opinions about what should go into that particular use case or product And so the challenge is you've got this issue where there's a developer ecosystem that is a dependency for building software in a shared and collective way. And then you have consumers that you have to get to adopt these applications at the same time. And it becomes this very difficult struggle to juggle both of those ecosystems simultaneously, which is, again, why money is really easy because everybody has the same definition of money.

But not everybody has the same definition of building a social network or building a video platform or building a new communication tool. And so that becomes the issue, I think, in this more decentralized Internet. Yeah. And the money makes sense on the blockchain, especially with Bitcoin, right? Because it becomes scarce. There is proof of work that you need in order to, that's the mining part of it, that you need in order to be able to extract it.

And that helps power the whole network. It actually is a very good use case. I think what you're getting into, the second part, talking about applications, is when people try to use some of those similar dynamics to run applications. And the idea of like doing software on the blockchain is actually, it's kind of interesting. And the proponents, I'll take a shot at doing the steel man here. The proponents of it say that right now and Web 1 was putting stuff on the internet, basically like brochures, websites were just information Web 2 was.

read write so you have like facebook where you can you know have conversations and post and communicate there the problem with web two according to the web three evangelists and i think a lot of other people is that it's centralized power in a lot of different uh in a handful of corporations and so web three the the reason why people want to have web three happen web three is for the internet on blockchain, the crypto internet, is because in theory, it could distribute some of the gains that are currently centralized within these big companies, companies like Facebook and Google and Amazon and Apple, and maybe Microsoft and others, it can distribute the gains. And by participating in networks, you become an owner of the network. And they're

and therefore, you know, you're more likely to participate in the network. It creates a better internet. Is that a fair way of describing what Web3 is? That is one component of Web3. So that's the incentive. That is a potential incentive model of Web3 that is being discussed. I can't, you know, claim that all Web3 projects share that characteristic. But I think that there's one notion of being able to have sort of a piece of these products.

and that's through sort of, you know, earning tokens over time or air drops or buying tokens. But that's, I actually see that as a little bit orthogonal to the main point, which is you have to build your software on the blockchain. And so that's really the main challenge is this idea of owning a piece of internet property is super interesting. And we've got many mechanisms to do that through equity distribution and there's crowdfunding that you can do to buy shares in companies. And so I would try and separate, and this is sort of my, a little bit of my argument is, is there are many ways to achieve more democratized access to investing in tech

companies, which is different from building censorship resistant applications that possibly are going to run into these complicated choke points and bottlenecks that might be undesirable for the end user ultimately from an innovation standpoint. And this is why this is such a complicated topic is we've sort of thrown a bunch of different models into one soup. We've, we've thrown in this idea of shared governance of software. We've thrown in this idea of ownership of from a sort of value standpoint of software. And we've thrown in this idea of composability and sort of decentralized innovation on

software. And really none of those things have to relate to each other, but they're kind of all in this giant soup. And ultimately, my only main, you know, thing of sort of bringing up and re-raising what the industry is, is let's just go to the architecture itself, the tech purely look at it from a technology standpoint and decide, are we going to be able to build better software in this model? Or will that software eventually run into some problems where either users will want to leave the platform because they're going to go join another network that can incentivize them better than the last network? And so you have these sort of unstable communities of users and social networks. And or do you run into this problem where you have a bunch of

of constantly competing protocols and software that ultimately makes the end user experience really, really hard to use in this future internet. And the way to think about it is when, again, when I build software today for an end user, I get to choose all the technology that goes into that software and then it shows up to you as a user. And you don't have to worry about all the choices that I made behind the scenes. But in a crypto network, you eventually have to worry about those choices because you have wallet that might contain a certain set of currency for that particular network or assets that

only work on a particular blockchain. And so now developers have to coordinate their activities with the user community. And all I'm sort of proposing is that it might eventually become incredibly and intolerably slow from an innovation standpoint. And that really becomes the contention is because we really haven't run into this problem yet because we've only been building things around money. And money, I believe, has enough incentive for that coordination. But once we go to more utilitarian things, I don't think you're going to have that same level of incentive and motivation. And we're going to run into some challenges. And I think case and point, it's sort of important to remember that this, you know, crypto and blockchains are not new. We've been talking about,

you know, certainly Bitcoin for 12 years. And we've been talking about Ethereum for five or six or seven years. And the reality is, even when, when you've seen, you know, use cases three or four or five years ago where people tried to put sort of shared data in a blockchain, you know, five or six years ago, we talked about that idea of, you know, we'll put, we'll track lettuce shipments on a blockchain, you know, through a global supply chain. And the reality was, eventually you ran into this issue where there was less of the need to have that being a blockchain architecture. And so it just eventually moved back into the regular kind of cloud and more web-based, you know, kind of typical internet model. And so, so all I'm,

you know, trying to throw out there is, hey, we might want to think through a couple steps ahead from a web architecture standpoint to figure out, are we actually going to get the desired outcome that we think we're going to get? Yeah, this is important stuff because, you know, we talk so much about the theory, but very rarely about the how this stuff actually looks in practicality. You're the CEO of a web 2.0 company. So can you talk just briefly in a really high level about the sort of software, I want to go back to something you said there, you make software decisions today. You don't have to worry about the blockchain and what would that look like on the blockchain.

And again, you have to be on the blockchain to enable some of these benefits that everybody talks about when it comes to Web 3. And that's, you know, talking about distributing ownership to users, talking about data, you know, interoperability. So just quickly talk about, you know, the software decisions that you make. now and what it would look like if you were to build on the blockchain at a high level so people with just basic understanding would follow you yeah yeah so generally i mean so this is this is the key kind of thing so um and this is why again it's really difficult because the philosophy is

brilliant i would never argue the against the philosophy like you'd be you mean you're you'd be arguing against a more open and free flowing internet so so i'm not against the philosophy um i'm I'm arguing that there might be incentive issues and difficult human consensus problems that would then prevent us from getting the innovation that we think we're going to get. And so here's the general concept. Let's say your Instagram today and you're building a bunch of features for your app and you want to build a new like button and you want to build a new feed and you want to build a new way that people can comment. You know, every single couple weeks, you introduce a new feature into your software. Well, in a blockchain model, you would basically do the same.

same thing, but you then would want other developers to adopt the standard that you've introduced or the new feature that you've introduced. The problem is that now you have to go call up all those other developers and say, hey, I'm about to release this new feature. Can you put it in your application so users get a shared user experience? Well, the reality is that's probably hard to do because they might have their own features that they're working on. So eventually you have this sort of choke point of the data standard, what data is going into the on chain, how will that data be represented to users across other applications. And so what you end up is this very complicated slowdown when you're trying to drive

innovation. And then we've kind of added actually a new complexity to it because we've incentivized the protocols. So we've added a monetary incentive to potentially defect to your own approach, which then reduces the sort of shareability of data. And so the only thing I sort of contend is that the reason that we get centralization over time is because users prefer to have faster innovation and they want to be on the network with more users. And to get decentralization, you get slower innovation. And ultimately, that just

has to be sort of a choice that users are going to be, you know, sort of need to be aware of. And I think what we're imagining is we're imagining getting all of the benefits of today's web and also ownership and being able to control our data. And there's a sort of incompatibility or contradiction with those two things. And it's not because you shouldn't have access to your data. You should. We should work on data portability. We should work on more open source. We shouldn't work on more APIs that let you export your data from from web properties. But that doesn't require a complete shift in the underlying architecture of the web. Why is innovation slowed? Is it just because there's more coordination that needs to happen when

people are, I mean, I guess like I don't understand why you would need someone to like make all these coordination calls that you talk about. And is that the main reason that innovation is slowed or tell me what? Well, imagine we wanted just two versions of Instagram that people could use. If one version adds a feature that the other version doesn't have and the other version and the other version of Instagram adds a different feature that the other one doesn't have, then we begin to have these sort of very incompatible experiences over time. And so this is why things like email protocols have not gotten a lot of innovation and there's

been very little innovation in email. And so we ultimately go and adopt chat applications and Slack and messaging tools in Twitter. It's because email is this really powerful protocol, but it has to be insanely simple. So that way everybody can adopt it. And the issue is that it's hard to sort of figure out what applications do we want to have those same levels of lowest common denominator protocols that are shared. And how will each application begin to decide what those protocols look like? So the vision is fantastic. The challenge is there are tradeoffs to consumer innovation that just need to be understood. And there's a great example. The app Signal, the founder of Signal, wrote a great post about five years ago about how hard it is to have a federated communication tool

and get innovation at the same time because you have to keep two completely different ecosystems in sync. You have to keep the developer ecosystem in sync and you have to keep the user ecosystem in sync. And you have too many different parties, all that have different incentives to go off in different directions at the same time. And so it's just a coordination problem. The issue is never technology. It's just about humans. And we don't yet have a well understood model of how we can pull this off is sort of the difficulty. Can you share a little bit about why crypto is based off of this coordination model? Maybe it has something to do with these decentralized autonomous organizations, and is that necessarily part of it when it comes to the ethos of crypto?

Like, I guess like, why would there be two Instagrams is another way of asking that question? Well, if there's not two Instagrams, then you would just have one Instagram, in which case you could just have centralization. So, so the point of the point of building on a decentralized network is so you could have two or 10 or 100 Instagrams. So that's sort of the inherent problem. So so there's an, inherent contradiction, which is if we're going to build this on decentralized technology, the point is then to have multiple clients. If we get multiple clients, then we run the risk of slowing down innovation. And so you have this very difficult contradiction that exists purely because of the technical architecture that the rest of the web doesn't have to deal with.

And the rest of the web, what happens is you can just decide, do you want to join Instagram because your friends are there? And you don't have to worry about there's going to be a compatibility problem with another version of Instagram that other people might be on. And so it creates a bit too much game theory for the end user to have to think about or for the developers to have to think about, are you adopting the right standard of the right protocol or are your users in the right place? And so this is why it's just a very difficult thing at scale. And it's not impossible.

It works for money. It works for NFTs. It's working for high value things where there's enough incentive to do that coordination. The question will be, will it work for areas where you don't have that same set of incentives? Why wouldn't it just be like a survival of the fittest where the best Instagram wins out? Because it would be. The question is, how many years will that take? Because you now have to still restart.

You have to go build all those apps. We have to introduce about three to four billion people to crypto in the first place. And in the process, you have on, you have unending sort of warring battles of standards of technical architecture. So it's exactly what would happen. It would be a sort of an ultimately, you know, a Darwinian effect. But again, it's just necessary for people to realize that you're signing up possibly for a, you know, a couple decade problem because you're going back, you know, literally a decade or two of internet architecture because we have to build out all of these new models again for this new web. And that's why innovation flows. Yeah.

And then innovation in the process is going to slow because everybody that decides to do a start. startup is going to have to decide, do I do it on this new thing that really only gets me advantages over the long run? Or do I build it on the regular web where I have access to three and a half billion people tomorrow or four billion people or whatever? There was a version of this that they try to do with Twitter, right? It was called Mastodon. It was like a bunch of different Twitters and you would sign up for an instance and that didn't end up working. Do you remember that? And is that sort of emblematic of some of the issues that we might see with stuff that's developed in this web three form?

You know, this is sort of the, maybe the thing I try and keep talking about, which is it's all about the user. The user is in control of the internet. The user is always in control of the internet. And the moment you have a single disadvantage for the user to adopt your technology, you're just putting the odds, you're just stacking up the odds against you. And so you just have to decide what is the value proposition you're trying to build. And are there going to be enough people that care about that value proposition?

I actually think there is a value proposition for censorship-resistant social networks. But that is the value proposition. And so you just have to understand that those are the kinds of users. That's the scale of the user base that you should expect to attract. And sort of just consider the sort of pros and cons of how big that market's going to be and how that will be able to sort of make money over time at scale. And I don't have any problem with anybody trying everything. I'm just sharing sort of feedback from history that we,

we've learned by building software at scale over the past, you know, 30 years of the modern, you know, kind of technology industry. That's right. And I think that point about usability is so important because ultimately a lot of people have pointed out to the stumbling blocks that you might end up running into if you're trying to build one of these applications, even if in theory it's going to distribute some of the games to the people who use it first. And, you know, that might have a network, you know, help you build a network effect and,

you know, potentially displace some of the others. I'm just going to read a tweet from Nikita Beer, who's, uh, He just left Facebook. I've been trying to get him on the podcast for ages. Nikita, if you're listening, come on. He says, it's hard enough to get a social network off the ground. It's literally a once in a decade black swan event. If you're making it decentralized and requiring your users to set up a wallet to participate,

you've reduced your already low probability of success to effectively zero. So is that what we're getting at? That's one element, which is you want your market. Anytime you're building a software, you want the largest possible market ever. and and so you definitely don't want to kind of create an immediate impediment on the market size and and so that that sort of becomes you know a core part of this challenge which is again I think there's fantastic philosophy in web three and you know things like DAOs I think are actually incredibly exciting I put money into the constitution Dow I think I thought that was a fun

experiment I think there's a lot of Dow is a Dow is this decentralized autonomous organization Nobody technically sort of, you know, fully controls it. It's governed by votes of sort of token holders and then it has a sort of purpose and you sort of, you know, make decisions about how that organization is going to be run. I think it's an incredibly interesting and fascinating architecture for lots of different kinds of rapid response organizations or even long-term structures. And you're kind of using software to maintain this organization in this really compelling way. I think that's an incredibly exciting experiment.

I think most things that I see in Web 3 are actually pretty exciting. I think the idea that it is a new internet that everybody is a part of for a lot of their software is sort of the kind of quasi challenge we're going to run into. And so this idea where, you know, there's a lot of talk about Web 2 versus Web 1. And in reality, Web 2 really was a set of building blocks that just all developers really decided to leverage like faster internet applications, browser-based software. It was a set of standards that made all software better. Web3 is not something that you can just apply to your technology and then your technology gets better. It is a different way to architect your application. And so it doesn't

sort of follow the same logic pattern of Web 1 to Web 2. It's really a different kind of internet model altogether. And you just have to know that, that, you know, what the limitations both and the upside is of building for that. And this is why a lot of people say it's a solution in search of a problem because it does have like all these like, you know, great theories and stuff. But when it's coming to attack what Web 2 is already built, we're going to, we're going to get some of those problems in the second segment here. But, you know, it doesn't, well, it's a, maybe it's a poor solution in search of a, of a problem. And because, yeah, it doesn't seem like it's actually making a lot of impact in terms of actually developing true programs that can displace some of the incumbents.

Well, what you're running into is this sort of opportunity cost because every moment, every hour of every day the developer build software, you are, you have choices of how much technology can I leverage from one market or another market. And if you have any sort of limitation and again, user scale or the infrastructure, that, that, that, That is a sort of a, that becomes this point of friction. But really, my main issue is just, or my main challenge to this, you know, the situation is, is the coordination and consensus complexity. That's my, you know, kind of main challenge that I keep running into is, is how do you build consensus with enough developers that you're going to be able to create an ecosystem? And I think it works extremely well when it's a high value transaction. So if it's monetary or an NFT, I think that makes it a ton of sense. I think it's very hard to do when it's small bits of data that on their own aren't particularly

valuable. Why does it work better for money or an NFT? Because if I transfer you $100 and the system takes out 10 cents or a dollar, it's sort of like we can kind of bear that cost. If I post a blog post or send you a tweet, I don't probably want to pay a penny for that or whatever the latest number is of some network. And so the challenge is the value to that data is incredibly low. So the demand from developers to sort of figure out the right protocols and all agree on things

because there's not going to be a lot of money flowing through those applications ends up being pretty limited as well. And so it's just very hard to then build the level of standards. that we have for money in some of these other kinds of use cases where there's just not going to be as much financial impact because of the data itself or the sort of need to coordinate on those use cases. So, okay, so if you build something in this like Web3 on the blockchain type of way, if you want to participate in some of these programs, you're going to have to use tokens in order to do so. And that can be a stumbling pot. Either your user has to pay or you

have to pay. So, I mean, somebody has to pay to transact. And you then have to decide. what's the sort of cost, you know, what's the cost and reward, you know, dynamic to that? And no matter what, you eventually, somebody's got to pay the bill and that bill will be incrementally higher than building that software another way because it's censorship resistant and has to be spread across more nodes, which is a fantastic architecture for certain use cases where you do need this sort of trustless technology. Yeah. And I want to end this segment on one, I think, extremely important. important point that you've brought up, which is the conflict of interest between a user and a

shareholder. Because if Web 3 is going to make users, you know, of new networks, new applications, owners via this tokenization, right? So if you sign up early or if you help build the network or you refer people, you become an owner by getting more of the tokens, which allows you to share in the upside, which we don't really have in Web 2.0. I think about Facebook. Facebook users get nothing. Facebook gets all the bounty. In Web 3, the idea is if you put it on the blockchain, you can create a system where users will actually share in the upside. But I think you point out something really important, which is that if you're a user and if you're a shareholder, you might want two different things. And that makes it really difficult to build where you

combined the two. Can you elaborate on that? Yeah. So I'll just put this in extremes. And then you'll sort of see in the middle, it gets more and more tense in the middle. As a user of a product, you should just really want the cheapest possible product with the most amount of utility. Like if I could get my entire internet for free, I would, I would want to not pay for anything. As a user, like eventually you want the cheapest possible solution. As a shareholder, you want as much sort of profit accruing to your shareholders as possible. And so, and so depending on where you are in the economy. If you're the user, you want cheap stuff. And if you're a shareholder, you want expensive stuff. Now, when you combine those two groups, the user and the

shareholder, the question is twofold. One, do you start to sort of create this very difficult decision tree for your users of what kind of product feedback are they giving you? Are they giving you that feedback because they want to make more money as a token holder, or are they giving you that feedback because they want more value as a user? I find it hard for myself to make those separations. And so having the entire internet sort of try and contend with that, it just becomes a very difficult problem. So let's just say there was a choice for our network to lower the price of the service for everybody. But as a result of that, our token value, is going to go down? What would we collectively decide to go do? Would we, would we lower the price to

get more users? Or would we, or would we keep the prices stable because it's because we want to keep our wallets protected from a token holding standpoint? And those are the kinds of things that, that while they seem extreme, those will subtly sort of emerge throughout many of these kinds of networks. That's the first problem. So you've got this problem of sort of, you know, various incentive conflicts in the network. The second problem is I actually just think it starts distort user behavior in a way that is hard to predict, but possibly just not that helpful, which is if I want this product's token value to go up, do I start to do things that sort of are gamified to that particular sort of scenario? And are those things going to be somewhat unnatural to really what the

utility of that network is. And then thus do I end up actually making the network maybe less stable or useful? So one example would be you launch a social network that has some kind of incentive scheme and all of a sudden people are just going back and forth pitching new NFTs to each other. And that's the only thing that happens on the network because people are financially rewarded for that kind of scenario. So now do you have a social network or do you have this sort of NFT kind of exchanging network? And so you end up sort of distorting what the user experiences and what the actual use cases are when you start to combine these incentives is the challenge. Aaron Levy is with us. He's the CEO of Box. We're talking about Web 3 and, well, Web 3

in the future of the internet. It's an important discussion. It's great to have you here. Aaron, after the break, I want to talk a little bit about why there's so much animosity towards our current ecosystem, why people are so determined to change Web 2.0, whether we can do that within the confines of the current web or whether it can take a shift change. like Web 3. So why don't we do that right after the break? We'll be back right after this. Hey, everyone. Let me tell you about The Hustle Daily Show, a podcast filled with business, tech news, and original stories to keep you in the loop on what's trending. More than 2 million professionals read The Hustle's daily email for its irreverent and informative takes on business

and tech news. Now, they have a daily podcast called The Hustle Daily Show, where their team of writers break down the biggest business headlines in 15 minutes or less and explain why you should care about them. So, search for The Hustled Daily Show and your favorite podcast app, like the one you're using right now. And we're back here on Big Technology Podcast with Aaron Levy. He's the CEO of Fox, also an outspoken, I'm a critic, I would say, of the current movement in Web 3 or how would you play? I would say, I'm just adding, I'm just adding questions. I'm just adding questions to the conversation. You know, the, yes, I go ahead. I think that, you know, the thing is, is I do this is about every technology, whether it's, you know, AI or VR. It just, this one happens to be

more contentious because it's, it's something that is sort of this nebulous, fuzzy kinds of concepts. And so, um, so it's, it kind of creates more more contentiousness, even though I would probably do it no matter what the tech was. Right. There's definitely a sense that like if you, from the crypto diehards, if you start to question Web 3, then, you know, you get blocked or demonized. I'm sure you've had a lot of that happen. I don't know. I'm trying to learn more about the pros and the cons. It just so happens that the people who are pro,

cough, cough, and Dresen Horowitz won't speak to journalists about it, which I think is a shame. I sent Chris Dixon an email this morning saying, you know, hey, Chris, we're going to talk about some of the pitfalls of Web 3. Maybe you come on and tell us why you believe in it. So far, cricket. So, but I'm just going to keep making these podcast invites over

the air and we'll see eventually that they'll work you know the chris dixon thing is interesting so um so i actually like him a lot um yeah me too personally and and uh i you know we've jammed on philosophy for for years in tech um and uh i just am concerned that we can't accomplish the goals uh that we're we're sort of setting out with this particular technology if the whole idea was blank sheet you know web three is about openness and interoperability and let's go find all the ways to go do that i think that would be a very compelling movement i think i think we've sort of re i think we've wired in a particular solution and path that that is going to be harder to achieve those things right and so chris dixon for context i'm sure a lot of people on the on the line

know who he is but he's a general partner at andreason horowitz who is very big into the crypto movement maybe the pope of the crypto movement. So let's just read a tweet that he actually sent to you at trying to explain why the current system isn't good enough and why we need a new system. He says, so what's your analysis for why we ended up after 20 years of experiments? We ended up with four to five companies

controlling most of the internet, closed ecosystems, very little API access, 50 to 100% take rates, opaque governance, et cetera. How do we avoid the same outcome again? So what's your response there? Well, my literal response at the time was I just don't agree with the premise. I think it's unfortunately a faulty premise. I think we have, you know, I mean, you are the closest to this.

We've got four or five massive platforms that make, you know, collectively a trillion or two trillion dollars of revenue. it's insane, but consumers have chosen those companies because they have innovated on products that we like. And at the same time, there's literally millions of other applications on the web that are, that many of which are thriving, that are even attacking those incumbents. So Snapchat is a, you know, 80 billion dollar social network. Pinterest is a 50 billion dollar social network. TikTok is a multi-hundred billion dollar social network, all of which attack Facebook in some way. Shopify is a multi-hundred billion dollar company going after Amazon. You have insane options for infrastructure and payments and messaging and APIs all throughout

the web. And so I just don't agree with the premise. I think the internet is actually in the ripest position right now for continued innovation going forward. And I would say, like, don't veer off the course. Like, let's just keep doubling down on this. And let's push for more openness and interoperability. I don't think we have to have a sort of a predetermined solution for how we're going to go and deliver that.

Yeah. And I've listened to Chris and read some of his work on this topic. And in lieu of having him on the show, I think that his argument would be that, like, yes, we have plenty of companies. However, it's very clear that people that are doing the most work on the internet content creators, the people who are, you know, adding value to networks like Twitter and Facebook and even the smaller ones that you mentioned, are not, and of course the musicians that have music on Spotify and the artists that are posting on Instagram or not cheering at all in the value creation of Web 2.0, and that's being concentrated in the hands of these big companies. And so Web 3 can solve that. Yeah. And I think the thing I would just throw out there is, you have to think about what

happens when the 100 millionth user joins. When the 100 millionth user joins, when the 100 millionth user joins a social network or Instagram or communication channel, what is the economic model that is going to ensure that that user benefits in this sort of shared internet kind of way? And so just giving early users tokens to these services, the future users in 10 years from now are not going to benefit from that. So you have to have a sustainable economic model that is going to be able to propel these services over the long run. And so if that is not through, if that's through payments, then we can already do that using online payments, including paying with Bitcoin or cryptocurrencies for internet applications. And if that's through ads,

then we already have ads. So what is the thing that is completely different about this architecture that gets us to this sort of creator paid web that is not only working because it happens to be the early adopters that are basically getting paid instead of the users in 10 years from now. That's that sort of the thing I kind of am trying to bring out into this thing is like, yes, it is true that if you restarted the internet from scratch right now and we give shares to all the early adopters, those people will make more money. That's empirical. The question is, is you'll still be in 10 years from now dealing with a new set of people that are coming in and they're going to want to make sure that they have a fair opportunity to

use these applications. And so you don't want to have an incentive structure that only benefits the early adopters. You want to separate the incentives between the sort of buyers and sellers of the market. And in a case of Instagram, there's content creators and we should create more mechanisms to help those content creators monetize. And in the case of Twitter, you know, people who have multiple ways to monetize by creating, you know, various subscription services or products they want to sell. Like I just, I disagree with the premise, which is that it's a broken model, I guess. Yeah, it is amazing. I mean, I don't think we're anywhere near what we need to be at this moment, but a lot of these companies who are, you know, squarely Web 2.0 are starting to

create ways for the people who are creating economic value. That's the thing is I would spend my time making that problem get solved. Yeah. So the end recent people always point to substack and I mean, it one substack. So, you know, I'm pretty familiar with it. It's Web 2.0. Users pay the creators, it doesn't need crypto to function. Correct. Correct. That's sort of the point is, is like anything you can do today that doesn't require decentralization, you're going to be able to go do with today's APIs. So if there's an immediate problem that we have in monetizing things, we've got sufficient infrastructure and technology to go solve those problems. So going and sort of limiting the total addressable universe to a smaller set of people and incentivizing

just the next set of early adopters of those services might not be the best path to getting into this long-term problem that that's the only thing i'm kind of throwing out there yeah i think you're spot on on that okay uh we're here with aaron levy he's the CEO of box we're talking about web three crypto in the future of the web we've talked about how this thing works some of the pitfalls we've talked about the challenge uh that it will present to or actually what what people are trying the problem people are trying to solve with web 2.0 um i think that it's not talked about enough, you know, who benefits and who stands to lose based off this debate. Some people are going to get really rich. Some people, you know, are going to lose

a lot of money. And so what would a shift like this actually do from a financial standpoint? Let's talk about that when we get back here after the break on big technology podcast. And we're back for one final brief segment with Aaron Levy's CEO of Box. We're talking about Web3 in crypto, a topic that, you know, I think is getting a lot of attention, rightfully so. It's been a while since we've seen a shift like this or potential shift like this with the web and it's certainly good fodder for podcasts and any sort of discussion when it comes to. We're making you very happy at least. Yeah.

The content creators are happy, but it's tough. It is tough to get our heads around because there's so many interests, so complex. But I'm glad we're having this discussion. I mean, I think that's, I think that's sort of the problem, right? It's a very, very abstract concept. And in Web 2, it was, I, you know, even back, you know, 15 years ago, I probably said the word Web2 like five times my life and Web2.0. And it was just, it was just better ways to build software.

It was that simple. It was better ways to build software. They could be more interactive, more real time, more collaborative. You could have tagging and new social experiences. That was the whole point. And, and in this. version, you have to understand, you have to understand organization models, new forms of economics. You have to understand finance and markets because crypto prices can change on you.

You have to figure out consensus building and game theory. It's just a lot to sort of, you know, kind of try and take on. And so it's, you're going to have a lot of confusion because of how nebulous that is. Yeah. And this is the first full podcast that we've run dedicated to it. For two reasons. One, I wanted to be well. read and come in with the ability to discuss it. And listeners, you tell me how I did. Two, we haven't seen any actual applications built on this stuff. Like, there's a lot of, like, talk about how you could build a better social network.

But honestly, it seems like the thing that's been built the most has been the NFT marketplace, which I think you posted the South Park, the South Park clip about it, which is kind of hilarious. But it seems like pop culture is starting to turn on NFTs. But, sorry, go ahead. Well, no, but it's a, it's a, it's a fair point, which is, which is, I actually agree with Chris Dixon on this point, which is, um, we probably should not expect to get web two like use cases in web three, because they will be disadvantaged in some way. So we should, we'll see web three native use cases and, you know, metaverses and games and these kind of things, which I think is, is super fascinating. But, but again, that might not sort of mean that everybody should go and run off and think that they're going to go decentralize every single piece of software. on the web, we have to sort of get more applied with the kinds of use cases where this makes sense. We don't have to. I mean, people can do whatever they want. I'm just sort of sharing feedback, having seen how the internet works for, you know, a couple decades and what people tend to adopt. That's all. What use cases do make sense? I mean, we talk about finance. What do you

think about is the NFTs, something that you think makes sense? I mean, the post, I'm just going to share, hopefully Nate, you can you can play this clip for the audience, but there's this great little clip from the South Park post-coronavirus special, where IHOPs start selling NFTs, and they say something like, you bring them in with tasty, delicious pancakes, and you fuck them with NFTs. Basically, it seems like it's, and he's like, if you believe in NFTs and they believe in NFTs are real, and we're going to be rich. Denny's Applebee's Max is the premier place in town for people to eat. With NFTs, you can give your customers unique digital goods on the blockchain. Lots of people eat denies and Applebee's, and lots of people know about NFTs.

You know what this is? People who eat Danny's Applebee's and know about NFTs, that's your target audience, maybe. And if you just believe in NFTs, then I believe in NFTs, and then they believe in NFTs, and we make all kinds of fucking money. That's a pretty goddamn good idea. And so it does seem like that that's, I don't know, it's a Ponzi-like type of thing. So where do you see the potential here outside of finance? and, you know, curious about the NFT thing?

I think, you know, I don't understand personally, but that's because I don't really collect much. So I would say that, I would say that, you know, you just have to know that you're buying a thing that either you have to hold on to or somebody else has to buy from you. And you just have to be aware that, that, you know, that there's a certain kind of. of tendencies of these things of hype and fads that can move. But I don't have any sort of

particular, you know, disclaimer of people doing that or not. People should just understand. That's how it works. It's not, you're not buying an, you know, you're not buying a share of a company that is going to produce cash flow. You're buying a thing that you either find valuable yourself or you think somebody else will find valuable. It's that simple. And, and I think that I don't understand it, but I also don't have any problem with it because people can go and do whatever they want. I think there's a couple issues, which is, you know, how do you know about the verifiability of the asset? You know, are you getting something that might not be real? Like there are some interesting technical, you know, copyright types of challenges there.

I think the fascinating one I've sort of seen is in the gaming community of, you know, people sort of, you know, people having some concerns about, well, what is this going to do to games from an incentive standpoint to play and are you playing to earn money now versus just have fun. I'm not a gamer, so I don't have any, you know, kind of opinion or take on that. But I would say it's an interesting sort of experiment to be watching from afar. And as long as people are sort of financially literate about the implications, you know, people can do whatever they want with their money in theory. Yeah.

And the argument for NFTs is it's not just a JPEG, but maybe it's an entry into a discord or some sort of membership card. we'll see if that lasts, it'll be, it'll be challenging. So we talked about finance, we talked about NFTs. Are there any other forms of, you know, promising areas in the crypto world, or are you sort of thinking that this might be the ceiling? No, I'm not predicting any ceiling. I think, I mean, these things can run on far, far, far, far longer than anybody can

imagine. I think that I find Defi extremely fascinating. I think there's absolutely interesting use cases. of this idea of sort of a protocol for money where maybe we can have sort of micro transactions on infrastructure and certain use cases and certainly international, you know, wire transfers and instant funding of projects, all of that kind of stuff I think actually makes sense. You know, regulation aside, we've got to figure that part out. It's just the rebuilding of software is the part that I contend with.

But the idea of sort of money, programmable money, I think, is, is a super, you know, fascinating concept. Do you own Bitcoin? I have a small fraction just to be able to watch the price. Yeah, yeah. Okay, so before we go, I want to talk a little bit about who wins and loses from this. If we do end up with this, you know, Web 3 movement, who stands to gain and lose? I know that Chris, to go back to Chris Dixon, he posted this tweet of like your top investors

and Facebook's top investors and trying to make it seem like, you know, big finances, you know, controlling the web. So I guess, like, I'd be curious to, I think you responded like, yes, so you're talking about like pension funds and retirement saving and stuff like that. So if we do make this flip, who stands to win, if we stay the way we are, who stands to gain the most? you know i i don't understand this line of the argument honestly um uh i think that the um i just i i don't actually like i can't i don't even process the concept um uh you know if we want to create more democratized ways of doing crowdfunding of investing and i think there's plenty of ways to do that i mean if a16 z cares to open up their fund uh to more people through a dow they should totally do that i mean i don't i mean great um uh i i i i

This doesn't sort of, this doesn't strike me as an interesting Web3 argument because there's a lot of solutions to doing this, including using a blockchain. It just doesn't require you to build software in a completely different way. What about the other way? So there's this great fight between Jack Dorsey and Andreessen Horowitz. Jack is basically saying that Andreessen Horowitz, who is like, I say the most outspoken pro-crypto venture capitalist firm, full stop. He's saying that they're, he's implying that they're pushing this whole Web 3 narrative, you know, about decentralization and democratization, in order for them to make the most money off of it. So he has this tweet, you don't own Web 3 talking to just regular people. The VCs and their limited partners do.

It will never escape their incentives. It's ultimately a centralized entity with a different label. I think that, I think there's an important. role for VCs in the economy. They fund companies that are innovators. And then the market gets to decide what products they use. I think there's an interesting role of making it easier for people to invest in companies earlier. I think there's lots of interesting innovation like Republic is a pretty interesting model for being able to democratize investment in properties. And I think the so I don't get as bothered by that dynamic. I think I think it's,

probably more they maybe the potential hypocritical nature of the message from the increase inside that is more of the problem which is it's sort of um they are going to be owners of these things so sort of you know acting like like web two somehow has more concentrated powers but they're going to still invest in these things it just feels disingenuous I guess and a pretty you know complicated message but I don't I don't get as passionate about this particular angle. Why do you think Jack is going full steam ahead on this? Well, he's probably even more passionate about the open source and protocol nature of all this stuff than I am. I'm actually much more enamored with the, or interested in the product challenges of building software in this

model. I think he's a diehard open source protocol fanatic, which is awesome. And we all benefit from people like that. And obviously, Bitcoin is certainly cordis. thing. But that's a little bit more adjacent to my interest in this area. I'm just like, how do you build the best product for people? And what's the best technology that can do that? And I've seen in history, the moment you choose a worse technology, a slower technology, a more costly technology, you just get into trouble. That's all. Aaron, I want to end with this. I'm going to get some people who are going to yell at me about it, but, you know, I feel like don't hate the question. The question is, so if you

you think about the base layer of human productivity, right? Like we initially like our economies, everything like that started to, you know, provide food and shelter for, you know, our families and then we moved into, you know, societies, all that stuff. What does it say about where we are right now? It's just a little philosophical. What does it say right now where we are right now as a species that we have like some of the smartest people who are like spending time, you know, working on a system, you know, that is essentially owning, you know, in some ways, you know, pointing to images on the internet for ownership, you know, of digital money and, and all these like sort of long-shot software developments. Have we reached a point where we don't have

anything more interesting to work on? Well, you know, I think the, this is sort of the, this is the, you know, the challenge. I actually think things like you know, Ethereum and even Bitcoin are incredibly fascinating concepts. And so from a computer science standpoint, I think are super exciting. And so that actually, I think, is progress in innovation on decentralized, you know, sort of asset value stores that are censorship resistant. So that makes sense. What I would suggest is, you know, if we go and try and rebuild today's internet on that, we would be, you know, spending, we'd be exhausting a lot of energy for, or spending a lot of energy on that project. And that could otherwise go into some, you know,

wide open internet spaces that don't have innovation yet. I would kind of point and channel, you know, more of the global computer science talent toward more of those types of things. But, you know, the market will ultimately determine that. I have full confidence that will resolve that, you know, that particular tension. So we're still focusing our energy on good stuff. I said oh I think largely the the we are channeling energy in the right things I think this is this is probably still a relatively niche topic within even Silicon Valley it's just you know people like you and I that follow the same things on Twitter we get all wrapped up in it and it ends up feeling bigger than probably it actually is okay great perspective and Aaron love you always great to speak with you all right good to see a galaxy you too thanks everybody for listening thank you Nick Gwattany for editing I think you read circle for hosting and selling the ads. Thank you again to MediaOcean, our sponsor. Please catch me tomorrow at MediaOcean's CES Summit. You go to MediaOcean.com to find that out.

And we'll be back next week with an interview with Senator Mark Warner. So stay tuned for that. It's going to be fun. We're going to talk about the U.S. government's approach to big tech. Thanks again to Aaron and all you for listening. Here we are. We're in 2022. Third year of the podcast.

We're still alive. We appreciate you being here with us on to 2022 and everything that awaits us there. Happy New Year. We'll see you next week.