THE TRANSFORMATION ECONOMY (PART 2)

The company

In 1602, the Vereenigde Oost-Indische Compagnie (better known as the Dutch East India Company) signed into existence a new kind of organizational charter - one that separated shareholders and investors from the company itself, and limited their liability.

The limited liability joint-stock company - arguably the most important innovation of the millennium - was born.

The invention of this legal concept sparked a 400+ year movement that brought the world’s most powerful institution - the limited liability company - into being.

The limited liability company has been an invaluable driver of the world’s economic, cultural, and political evolution since its invention. It can more seamlessly pool capital (human and financial) to fund larger, riskier ventures, and limit the risk of those involved to protect against personal bankruptcy.

We humans invented the company, and the company invented our world.

Our tools shape us

We co-evolve with the tools and technologies we create. We work on them, bring them into creation, and in turn, they work on us, altering our course.

As fast as we remake our tools, we remake ourselves. We are coevolving with our technology, and so we have become deeply dependent on it.

We are now symbiotic with technology.

Kevin Kelly in What Technology Wants

As needs arise, we create and invent to solve them. Our new way of life creates new problems, and we create and invent to solve those. And so it goes.

But each time, we start from a better world. We pick up where those before us left off, standing on their shoulders and using their progress as our launch pad. Each step builds on the last, using more advanced and effective tools.

This creates new possibilities.

The problem with yesterday’s tools

The company unleashed a surge of innovation that’s made our world unfathomably better.

But there’s a problem.

The traditional corporate model separates the people who matter most - the humans, creating and participating in the project - from the legal framework governing the company's operations.

Several layers exist between the people who engage with a product, service, or community and the company’s legal and operating structures that coordinate and govern its resources.

Limited by our tools, this gap has left us living and working with systems, not humans.

It’s the non-human, legal constructs of the company that orchestrate power and value, removed from the humans they’re built for.

Our systems only loosely coordinate people and value. A company isn’t exactly equal to its impact on the world.

The gap between humans and systems limits us. I believe the closer we tie our systems to what matters for our humanity, the better off we’ll be.

This is the best we’ve had - and we’re better for it.

Until now.

Enter web3: our tools of tomorrow.

Web3: from users and owners → users who own

My TL;DR of why I find web3 so compelling is that it moves the hub of coordination from companies to individuals. In web3, members/users/customers/etc. are also owners, unlike today’s companies.

Web3 shifts us from users and owners to users who own.

Yup. That’s right.

By engaging with a project1 , users become members2 , and earn ownership. By contributing to a project’s mission and goals, whether through usage or participation, payment, investment, or anything else deemed important, we share in its value.

Web3 pools independent action, energy, and resources for shared ownership and upside.3

Web3 technology better aligns incentives to coordinate shared action of individuals towards a mission. This results in more efficient use of resources (human and financial) with less waste and negative externalities.

Culture and capital are now intertwined. Belonging, affiliation, and status are no longer so separate from financial value.

Alignment is positive-sum

I mentioned that web3 pools independent action, energy, and resources for shared ownership and upside.

The shared ownership and upside that web3 enables is the truly new aspect.

Tools for pooling action, energy, and resources on the internet have been around for a while. Social media platforms bring us together to share information, ideas, or pictures. Kickstarter and AngelList enable individuals to fund projects, rather than institutions.

However, in these examples, we once again see the problems of yesterday’s tools.

The problem is that we’re just users of these platforms. We don’t have any ongoing, vested interest in them, financial or otherwise.

Imagine benefiting financially from using Instagram as it grows. Imagine that the earlier and more you used it, the more you benefit.

With web3, we can build projects and communities with shared ownership and upside, creating truly positive-sum environments with aligned incentives.

As members, we benefit when the project succeeds.

When one wins, all win.

Let’s get what we came for

The conditions of the current system are suboptimal.

Web2 gave us companies working to bring better content and community. Limited by the current system’s design and incentives, they don’t quite deliver what we seek.

In fact, they’ve so often ended up doing other things entirely.

While the platform owners benefit financially from people using their sites, the users don’t share in any of it. In fact, they often end up harmed in the process.

Due to misaligned incentives, these web2 systems often become extractive, aiming instead to get as many users as possible, for as long as possible, so they can sell as much advertising as possible.

These platforms are free to use, but we’ve ended up becoming the product they sell to advertisers to make the owners money.

We wanted content and community, but got a thin layer of information and connection while these products extract value from us.

If we knew this upfront, we might not have shown up to the party.

We’re not getting what we came for.

We now have the tools - so let’s use them

Let’s connect this back to the Transformation Economy.

I think we’re entering a new era.

Yesterday, we exchanged value for content.

Today, we exchange value for community and connection.

Tomorrow, I believe we’ll exchange value for transformation and impact.4

As we’ve expanded beyond physical geography to a digital world, our relationships have hollowed out.

We’ve sacrificed depth for width. Our anchors of community and connection seem to be suffering - and so are we.5

Look - our need for community and connection isn’t going away.

But we live in dynamic relationship with our environment and the prevailing culture. We create new technology to improve our lives, but new problems arise.

Such is life.6

But as we just said: we’re not getting what we came for.

Today, we still long for connection and community with those who believe what we believe, and seek what we seek.7

Today, we long for wisdom.

I believe we long for the thing we’ve always been seeking and building for all along: transformation.

With web3, we get what we came for.

With web3, we get projects that deliver the change they seek to make, without detours or unintended consequences.

We get a system that’s positive-sum, and fully-aligned.

We get a system that unleashes collaboration, and better delivers a project’s purpose.

I’ll go even further.

With web3, we get a system that requires and rewards collaboration.

Web3 scales service.

By serving others, we serve ourselves.

And perhaps even more powerfully, the opposite is also true: by serving ourselves, we serve others.

It’s quite poetic.

Web3 celebrates collaboration and humanity.

It’s a vote for optimism.

For abundance over scarcity.

For creation over extraction.

For win/win over win/lose.

In web3, we go on a mission. Together.

We make progress. Together.

We make money. Together.

Life is lived in relation to other people.

Let’s make it better. Together.

More on that in part three.

Until next time,
Devin

1  I prefer “project” to “company” because it feels more accurate for crypto. For simplicity, I’ll use “project” from now on.

2  Similarly, I prefer “members” because I believe web3 is a collaborative ecosystem by design and nature.

3  Huge credit to Jonny Mack, founder of Hypersub, for the super concise concept and for helping refine my thoughts on these topics. I highly recommend listening to his conversation with Sina for a brilliant deep dive.

4  Interestingly, each change in dynamic builds on the last.

Even as content approaches infinite and free, we still use it. As we work to undergo our desired transformation, community and connection still play their part.

Each part contributes, even as we add new ones to the bundle - but as the world evolves, the value shifts to the new component.

As I look at my own process of transformation, I’ve come to see that it’s through a dynamic combination of things that I make progress. This includes things like insights and entertainment from content, engagement and relationships in community with others, as well as other, emergent elements - like energy, inspiration, meaning, fulfillment.

5  I wrote a whole separate essay on this topic, so I’ll spare the rant here.

6  Actually, I believe it’s a feature, not a bug. The constant push and pull with the world around us is what keeps society moving forward and improving our lives.

This is essentially the belief of the techno-optimist: the belief that each next problem is solvable. That we are not stuck or doomed. That we can, and do, make progress.

7  After all, people change people. Even the information, ideas, and insights that change us do so through our interactions and relationships with others.