Interviewer: Tell us, you know, simply, what Facebook is and what it does.
Mark Zuckerberg: So, I think Facebook is an online directory for colleges and, um, it's kind of interactive.
A challenge of understanding early disruptive technologies is that it's usually difficult to identify the core feature and too easy to get caught up in the details of the product's scope.
In that early 2004 interview, Mark Zuckerberg, holding a fraternity-style beer pong cup, saw Facebook as a utility tool for colleges. This was a lofty goal for a 20-year-old internet entrepreneur in 2004. Facebook's "interactive" features were, um, a nebulously interesting afterthought, wholly unexplored and unproven at the time.
Knowing everything you know now, how would you describe Facebook differently sitting on Mr. Zuckerberg's couch in 2004? How has the scope of Facebook evolved at scale? How does real-time commenting, Timeline, emergency services, or the Facebook Live Map mesh with ideas of scope and interactivity? And isn't human interactivity, not the scope of which markets Facebook serves, the principal dimension in which the company collects its rent?
When looking at Steemit, it's easy to see a publishing tool with interesting and unproven economics.
“It’s basically an incentivized social media platform,” said Steemit’s chief executive, Ned Scott, in an interview.
But if you desire to Think Big about the Steem experiment, it would serve well to learn from previous disruptive technologies and posit that the success case of the platform goes far beyond a social media application. In actuality, it lies in the economics.
“I don’t know why it has value,” said Tone Vays, head of research at BraveNewCoin [...] “It just goes to show how you stick the words ‘New Crypto’ in front of something and speculators just come running.”
The question of why people throw cryptomoney around on risky, unproven, exciting, entrepreneurial, and cutting-edge technology endeavors is either an insurmountable conundrum or utterly obvious to any pimply cryptonerd. But I propose that it doesn't matter.
What matters is that if the crowdfunding effects of, at best, future expectations of value and, at worst, irrational exuberance can be packaged into a relatively safe mechanism to bootstrap mainstream decentralized products and venture capital-less companies, then what we have here, Ladies and Gentlemen, is a highly disruptive economic technology.
What if entire industries could leverage speculative value found in cryptomarkets not only to bootstrap social networks at scale, but also airlines, telecoms, and solutions to globally-sized problems?
While it is not yet clear exactly what "publishers and advertisers coming to Steemit" looks like, imagine business models where platform critical mass is much more well-defined. What if you could get institutional customers to give indications of interest for aspirational products without ever investing in their development? "Hey guys," the Louvre Museum might say, "if you build a global database of attributive media metadata, we would, like, totally buy that. For $n million." How about that for a down-to-earth raison d'être driving "speculative capital" in Steem and Steem-like platforms?
At the end of the day, we need to think about whether speculative capital business models are sustainable. And if they are not sustainable in the current form, are there modifications that make them sustainable? If this new economics succeeds, the scope of Steem will grow far beyond social media publishing. Venture capital will be disrupted, or at least shocked, by a proliferation of companies which fund themselves. Investors everywhere will be buying and investing in platform cryptoassets. And, I dare say, next-generation cryptofunds are going to have long waiting lists of investors wanting to get uncorrelated, liquid, and high-growth returns.
You can bet in the bull case that Steemit it will be much different than it is today. And it will be the core feature and not the scope that won the battle for disruption.
Note: all emphasis above mine.
Jake Brukhman is co-founder at CoinFund, a blockchain technology research firm and proprietary cryptoasset investment vehicle. CoinFund’s team brings together expertise in high technology, quantitative finance, private equity research, and social innovation research to generate insights into this exciting growth space. CoinFund provides consulting and research services to investors and companies interested in blockchain technology. Follow us on Twitter or join the discussion on our open community Slack.