From the Magazine Techonomy Events

Could Blockchain-based Systems Replace Facebook?

Excerpts from our on-stage conversation with Union Square Ventures Managing Partner Fred Wilson at Techonomy NYC, May 2017

David Kirkpatrick: How do you think about Facebook, Google, and Amazon in our lives and in our societies?

Fred Wilson: They are optimizing around an attention-driven business model. Somebody will create a new business model that is not attention-driven…and they won’t be able to react to it quickly enough, and they will get disrupted.

I think probably the most disruptive business model is the token model that we’re seeing emerge in the blockchain. It is really a native business model for the open source, creative commons. It’s like Wikipedia or Linux–systems that are decentralized, open and community-powered…

We will use [blockchain-based] tokens to participate in those systems. People who create value in the systems will get rewarded with the tokens. People who participate in the systems spend the tokens. and the tokens increase in value in the way that a stock price would increase in value as the impacts of the system grow. It’s a native, elegant business model for community-powered systems. It’s very disruptive to the attention-based business model, and there are going to be very, very large companies built from the ground up based on those business models.

Kirkpatrick: Why would that disrupt Facebook’s ability to monetize attention with advertising?

Wilson: People walked out of Facebook because they realized that they’re basically giving Facebook all their data so Facebook can run advertising against them. A lot of people are already opting out of Facebook. We had a gathering last week of the CEOs of all of our portfolio companies…At the beginning of the day we go around the room and people talk about the thing that has changed the most for them personally as they run their companies in the past year. The thing that came out, surprisingly, was that people are not using social media anymore, other than to promote themselves and their companies. They’ve unfollowed everybody, and they’re just using it as a broadcast mechanism. They’re not consuming anymore…

Kirkpatrick: So either blockchain itself or that kind of model will play a significant role in this next wave of innovation?

Wilson: The architecture of the Internet is beautiful, but there are a bunch of things it doesn’t do very well. Things are getting hacked right and left, and there is malware and spam and phishing. And the monetization models tend to be very attention-driven. And all of our data is stored in someone else’s servers and not on our own servers. So our search history, Google has; our purchase history, Amazon has; our friend graph, Facebook has…

New technologies will emerge that will fix those things…we’re going to have decentralized storage, decentralized compute, decentralized security. All these things are going to be monetized with a token or a coin-based business model, as opposed to a subscription or advertising based business model.

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