Week 3: From Here to There: Learning Chinese, Small Steps and Crypto

In the summer of 2019 I took a trip to China and Japan with Jenny and her family. During the trip I met Jenny’s extended family, her grandparents, aunts and uncles. Both of Jenny’s parents immigrated to the United States for graduate school. While we were in China I was basically unable to communicate with members of Jenny’s extended family besides acknowledging their presence. Whenever we had meals Jenny had to translate everything for me to follow the conversation. Jenny’s family members went out of their way to make me comfortable which I really appreciated, but sometimes I felt a sadness that I was unable to communicate with them and express my gratitude.

Even before that trip to China I was interested in learning Chinese. Months before the trip I started using Duolingo to try picking up some basic competency. Learning a different language is something I have always struggled with. In school I switched the language I was studying multiple times because it always seemed easier to start from scratch then really progress with one language.

Learning Chinese is one of the most meaningful ways I could spend my time, yet it is a task that I still have made no progress on. It would be so rewarding to be able to communicate with Jenny and her parents in Chinese. I would love to express my gratitude to Jenny’s extended family and converse with them. At the same time, the idea of learning Chinese is overwhelming. It feels like such a large task that will take so much time and work. The hugeness of the task can make it difficult to even get started on it.

To achieve something difficult it is helpful to have small intermediate goals to make the task feel more manageable. Breaking the task down into smaller steps makes the transition path a lot clearer. It gives actionable steps that I can take today to start learning Chinese. It is important to feel like I am building momentum and that I am making progress. Those smaller tasks / goals also give me a way to calibrate and change my learning plan as I make progress.

The vision of being able to communicate with Jenny’s family in Chinese really motivates me. I need to keep that vision front and center as I figure out small steps to get more there. I do not need to be fluent in Chinese in the next year or two. I want to start marking progress on the task so that in four to five years I might be conversational. Making such a large change happens through sustained effort and small incremental changes to get from here to there.

Currently, there are many technologists who praise blockchain technology (sometimes referred to as “web3”) as the next big paradigm. They believe web3 will create a new internet that gives power back to users and gets rid of centralized platforms.Crypto evangelists paint a very compelling picture of how blockchain technology will create better outcomes for all people. When I read some of these pieces, I can feel an excitement growing in me about what the future of the internet might look like.

This compelling picture of the future is a big reason lots of people are moving into the crypto space. (Well, that and because people have started making a lot of money in the space.) This vision has inspired me to write a couple of pieces about how organizations could be funded differently creating a different incentive structure using crypto. My interest in crypto is sparked by how I could use the technology to build organizations that improve my own work life and the work life of many others.

This picture of future organizations is quite different from how companies and funding works today. Since the future vision involving crypto is so different, it can difficult to understand what these changes would mean in practice. How would they actually work? Crypto wring does not always do the work of bridging the gap between where we are today and how we get to that future vision.

In hopes of clarifying what this future might look like, I am going to break down the steps of getting from where we are today, to the ideas I proposed in this piece. Breaking down the transformative change into a few steps makes it easier to wrap our heads around concepts. It forces a clearer articulation of what is actually changing, how to achieve those changes, and what might be the benefits of those changes.

Previously, I proposed a DAO that creates content and is funded through tokens. I used Substack as a jumping off point and then came up with a new structure. Now we are going to take small steps to get from substack today, to the DAO idea I suggested.

Step 1: Moving from a few tiers to infinitely many tiers

Currently, creator subscriptions like Substack or Patreon often have a few tiers. There is often a free tier where you only get some content, a paid tier where you get most of the content, and a super supporter tier.

This tiered structure is valuable because each supporter values the content differently. Currently, tiers work by having additional content at each tier. A higher tier is more expensive because you receive more content at that tier. Here is an example of how tiers might work in practice. We have four people

• Person A who values it at $1 a month,
• Person B at $4,
• Person C at $8
• Person D at $20

And Tiers:

• Tier 1 is $0 dollars for some free content
• Tier 2 is $5 dollars for the majority of content and the free content
• Tier 3 is $10 dollars for all of the paid content

Each supporter will get put into a tier based on how much they value the work

• Tier 1 has A,
• Tier 2 has B and C
• Tier 3 has D.

Each person gets matched to the tier that most aligns with how much they value the content.

In this type of structure having more than a few tiers is basically unfeasible. It means the creator needs to slice their content in a lot of different ways and can make the options for a supporter complicated. I have not seen any set-up that has more than three tiers.

However, with only a few tiers, both the creator and supporters may be missing out. The creator is not necessarily capturing all the value they are creating. Person D values their work at $20 dollars but is only paying them $10. Person D might be really happy with this situation because they are getting something they value at $20 dollars for only $10, but they might be even happier if there was actually an option for them to get more at $20 dollars.

While a couple of tiers is better than no tiers, there is still loss with such a small number of tiers. We could improve on this by having more tiers. An ideal scenario would have no value lost if there were infinitely many tiers. Supporters no longer have to bunch into tiers but can pay exactly how much they value the content.

With the current structure of paying more to receive more content It is impossible to achieve infinitely many tiers. Instead, infinite tiers can be achieved through selling ownership in the work. Rather than paying to consume what someone is creating, you would be supporting them by becoming a part owner in their work. Supporters are investing in the creator. Each supporter can invest as much as they want.

This new ownership structure means supporters get value directly proportional to how much they pay. If you pay $20 you get twice as much ownership than when you pay $10. Having ownership is valuable because you can later sell that ownership or because you might have more voting influence when the creator makes decisions. Voting influence seems foreign when it comes to creators but it could be as simple as helping determine the topic of the next article or podcast episode. Creator’s will have to make decisions about what having ownership in their work means. It seems likely that different levels of ownership might still come with some benefits (e.g. Own above .01% to get early access to work or own above 1% to get access to discussions with the creator)

Switching to a structure of supporters buying ownership in the creator’s work creates infinitely many options for how much to support. Supporters have more options in terms of how to support the work. Creators will capture more of the value they are creating

Step 2: A subscription whose price fluctuates and that can be resold

In our current Substack and Patreon world, the creator determines a fixed value that their work is worth. Every month supporters pay $5 dollars to get access to the work. The price of $5 remains constant. It is constant regardless of how many other supporters there are. This structure makes sense because one person being a supporter does not interfere with someone else being a supporter. Everyone can access the content and one person accessing it does not impact others ability.

If creators are selling ownership in their work, that same relationship of each supporter not impacting each other does not hold. If one supporter owns a certain part of the work it is not possible for someone else to also own that same part. We have moved from a world of infinite resources to a world of limited resources.

In this world of limited resources, the price of ownership is no longer solely determined by the creator. If people are willing to pay more for ownership, the price of ownership will increase. This means the price is determined by the demand of supporters instead. At the beginning a 1% ownership might be worth $100 dollars. But if there is more demand for that ownership through supporters, it could increase to $1000 dollars. This increase in price especially makes sense if the creator is working on something that builds over time. It also makes sense if ownership gives access to scarce resources like the creator’s time.

Since supporters are buying ownership, they can also sell that ownership. This means that if the price of the resource goes up both the creator and supporters receive monetary benefit. This ability aligns supporters and creators because they both want the value of ownership to increase.

Step 3: A subscription with many different offerings rather than one offering

In our current world, every supporter gets the same return when they support a creator. Each $5 dollar subscription brings the exact same benefits. Another step would be to allow different bundles. This means that even at the same price point supporters can receive different things. Rather than supporting all of the creator’s work a supporter can directly say I want to support this section of your work. This section of your work is what I value and so I am going to support this part of your work.

For supporters today, there is an inability to support only certain aspects of a creator’s work. Supporting them means paying one fixed fee that supports all of their work. But a supporter might only really care about one aspect of their work. It would be beneficial if the supporter could pay less and only receive the work they actually value. Supporters in this future world will have options to only support the work they deem valuable. This could mean that some supporters will no longer be priced out by having to support the entirety of the work This gives supporters more options.

Allowing supporters to only pay for certain aspects of the work may also help creators capture more value since some supporters will now longer be priced out. It also gives a creator direct signal on which aspects of their work others find the most valuable.

Taking steps 1, 2 and 3 brings us to a completely different place than the current creator and supporter relationships. Creators sell ownership in their work which supporters can buy. Supporters can purchase as much or little ownership as they want.

So why is this new relationship potentially better than the one we have today?

• Supporters have a lot more choice in how to support. They have more price points and can support only specific parts of the work.
• Supporters have the opportunity to make money from their support.
• Creators are capturing more of the value that they create.
• Since supporters have the opportunity to make money, it is more palatable for each supporter to give more money, meaning there can be fewer supporters. With fewer supporters a creator can have more direct interaction with their supporters. It is possible to directly talk to them or give them presentations.
• The creator and supporter having ownership in the same asset means their goals are aligned. They both want the value of ownership to increase to receive a payoff.

Hopefully by taking smaller, more digestible steps, I have helped bridge the state of our current world to the one crypto enthusiasts envision. This bridge has hopefully given us the ability to conceptualize a future system without having to dive into the technical details of crypto. Crypto is the technology that could underpin this future system, but it is not critical to the conceptual understanding.

Crypto enthusiasts are so excited about how the technology will take us from the world we are in today to their future vision. But why us it crypto technology that uniquely enables their vision? One argument is that crypto makes this future vision possible because it has trust baked in. Trust is part of crypto because using cryptography to coordinate the buying and selling of ownership means every transaction can be verified by anyone. It creates a decentralized ledger which lists every transaction that happens. Any time anyone buys or sells ownership it will be recorded in this ledger. This decentralized ledger means there is no centralized failure point anymore.

For the type of creator and supporter relationship I have outlined above to actually happen there are a few necessary ingredients:

1. A technology that orchestrates the buying and selling of ownership. It needs to allow people to buy different amounts of ownership and to allow that ownership to only be in certain parts of the work. Ideally this technology is user friendly, easy to use and transparent.

2. Supporter trust. For supporters to put their money into that technology they have to trust it. They have to trust that the asset they are paying is worth something. That it will not be stolen from them and that they have control over it.

If we believe that crypto is a technology which brings both 1 and 2 then it makes a lot of sense to build this vision using crypto. But I find it hard to believe that crypto is the only technology that can actually bring supporter trust. There are other ways to build trust that do not involve decentralized ledgers. Supporter trust might be mostly dependent on who the creator is and their public record. Another way to achieve supporter trust could be through some simple and minimal legal contracts. Similarly, centralization can actually be helpful when trying to create trust. When a creator is on Substack or Patreon I feel comfortable giving them money because I trust those platforms.

The decentralized nature of crypto might actually in some ways impede trust. There are many examples of trust being created through a centralized platform. Uber created enough trust for us to get into cars of random strangers. Airbnb created trust for us to go stay at homes of random strangers. Uber and Airbnb created the technology to allow a new transaction to happen while also createing trust through ratings, reviews, and their brand. Both Airbnb and Uber make creators (drivers and hosts) do certain things before being on the platform.

What determines the success of a platform or technology is its ability to let users easily achieve their goals. Crypto might be the best technology to create the future internet that we want because of how it handles trust. But there are also other ways to also create trust and something built using crypto can still be untrustworthy.

I find the most inspiring part of the crypto movement to be its vision for what the future might look like. This vision has brought a lot of capital and creativity into the crypto space. But just because something is using the blockchain does not mean it will inherently create this vision. If people moving into the crypto space are more focused on capital than they will make decisions focused on capital.

The key to fundamental change is to focus on the vision of the world we want. With that vision in mind we can start taking small steps towards that future world. We can ask which technologies enable that vision rather than assuming a specific technology will solve all problems