Distribution is web3 consumer’s #1 problem

Nearly every web3 startup founder I talk to, talks about distribution/ go-to market/ BD being their biggest challenge. We agree on problems but do consumers care enough, to actually buy the solutions? For e.g. do web3 projects/ devs really care about on-chain databases? Do consumers really care enough about protecting their data and identity?

Specifically as it relates to consumer use cases, distribution is web3’s #1 problem. NFTs heralded a new ‘creator economy x web3′ movement. Creators could launch NFTs, list on OpenSea, create white-labeled NFT marketplaces, launch social tokens and theoretically reward their early fans/ supporters. But where are these fans and supporters coming from? From the creators’ web2 social media channels – Instagram, TikTok, Twitter. Web3 currently has no native distribution/ discovery – no aggregator or platform that lets new creators find crypto-native audiences, who can be monetized through NFTs and other digital ownership experiences. New creators still largely depend on web2 social to ‘acquire’ a following – therefore 1) a vast majority of their fans are web2-only / not yet on-ramping to web3, and consequently 2) their web3 presence becomes ancillary/ secondary to their web2 social business. *That* is a key reason social tokens for creators haven’t yet worked, nor have decentralized social networks. While web2 social extracts disproportionate value from their content, it helps the vast majority (i.e. long-tail) of creators find audiences, and therefore income. For the average creator, there is enough $$-to-reward ratio in web2 vs. the incremental effort to create a new web3 presence without an existing distribution platform – a key reason the creator economy/ social tokens x web3 movement is struggling.

Building web3-native distribution experiences is key to get the creator-fan flywheel going and realize web3’s “cut out the middleman/ capture value from your content” promise. However –

  1. It is inconvenient/ expensive for users to onramp into web3
  2. Most users don’t currently care about the privacy/ censorship resistant benefits to *pay* for it, literally

Infrastructural leaps and onramp solutions will help make web3 better, cheaper, faster, and help users who *want* to onramp, be more willing/ able to. However, we’ll still need more ‘real-world’ value props to make average consumers *want* to onramp into web3. A few hypotheses on how we get there –

  1. Brands – hot take (or not): brand loyalty > creator loyalty usually. PLUS it’s easier for brands to take a longer-term approach and invest in digitally-native web3 experiences, than it is for creators. If Nike or Lululemon make web3-native experiences, more users will onboard + continue to engage, vs. if individual fitness influencers do. If brands can make their customer loyalty programs more meaningful through NFTs/ rewards, it’s a win-win. Startups like Hang are helping brands do this, and I see this as a key channel for consumer adoption and growth.
  2. Gaming – Gaming has been accelerating and mainstreaming web3 adoption for a while, not only among gamers. Nike, Adidas, Samsung are already on Sandbox; Animoca Brands is helping Manchester City launch web3 games and NFTs. Gaming is a strong use case to onboard users into web3, with or without brands.
  3. Web3-native social media – This is the hardest one because the primary value prop is privacy/ data ownership, which most users don’t care enough about, to transition out of existing networks + pay for it. However, if these networks can a) be as convenient, fast, cheap as web2 networks and b) seed a specific community that is tech-savvy enough to adopt web3 (e.g. engineers, investors, specific sub-reddits), it could take off.

Mainstream consumer adoption needs not only the tech (infra, onramp) to make it viable, but also compelling use cases that warrant this adoption. Separately, building a “protocol for other social experiences and products to build on top of us” is not working. Nobody wants to build on a protocol that doesn’t have existing distribution – developers build on iOS because millions of people own an iPhone. Building a stand-alone product with distribution is *key* before thinking of it as a protocol – something Farcaster is attempting to do.

Building web3-native distribution channels is key to onboarding creators and making the “web3 social” vision possible.

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