Reid Hoffman | Vices and Virtues in Web3

Hello, I'm Chris Yeh, the co author of Blitzscaling and I'm here once again with my co author and old friend Reid Hoffman, the co founder of LinkedIn and investor at Greylock Partners. Now Reid, back in October you wrote an essay about your experience with web 2.0 and in it you expanded on your famous heuristic about investing in the seven deadly Sins. I thought it was a great philosophical essay thinking about how we should take on the challenge of applying Adam Smith's other great book, the Theory of Moral Sentiments, to harness deep seated human appetites for the good of society. And for you listeners out there, you can find Reid's essay on the Knight foundation website and we'll put a link to it in the show Notes. Now what happened was reading your essay prompted Bloomberg journalist Joshua Brustein to reach out to you and ask about how some of the lessons from prior Internet ages can be applied to what we're seeing today in the growth and enthusiasm around what's now being called Web3. I thought Joshua asked some pretty smart and provocative questions and that we should dive deeper into your perspectives on the topic where we don't have a constraining word limit. So let's go ahead and get started with the first question. Joshua observed that much of what you describe as the founding Principles of Web 2.0 resemble the way that people talk about the ethos of Web3. And I think he was thinking of the passage where you wrote wild idealism was the lingua franca of Web 2.0. The general belief was that fewer gatekeepers, freer information flows, and peer to peer connectivity would inevitably create positive outcomes for individuals and society alike. I'm wondering whether you see those same similarities and what you make of them.

Well, first to back up a bit on history, which I think even Web 1.0, the Internet, had that kind of wild idealism. And there's a little bit of obviously today's color to say, oh, that was wrong as opposed to that was right, which I think it was right at that time. I think that part of what was happening in the creation of the Internet was the notion of redefining this kind of space by which people could communicate and find each other, by which information could flow. I mean, look at for example, the fact that now anyone who has a cell phone with a data connection can essentially access Wikipedia and a wide variety of other kinds of information resources that didn't exist before that. The questions were, I think, a bunch of the kind of positive changes that we've seen in society. Anything from the resurgence of the Black Lives Matter movement, you know, which comes from being able to upload videos and other kinds of things and say, look, actually, in fact, this was police brutality and police differentially creating challenges for underrepresented communities. And that we need to improve how we constitute our communities. What's the way that we provide justice and fairness and healthiness to all of society. And I think all of this comes from this wild idealism around a broadly open Internet communication system. I think part of where it moved from Web one to Web two and I was part of this kind of move from Web one to Web two was Web one was. You kind of went off to the pioneering cyberspace and you maybe had a pseudonym because it was unknown place where you're going. So I might be anime fan and you might be pop culture boy and, and da da da da. And this is how we were interfacing with each other. And then Web2 brought your real identity and your real relationships. Obviously part of LinkedIn being part of this by saying what your name was and who the real people that you have knowledge and alliance with and how you help each other not just navigate the world of the Internet, the world of the web, but also the world of real life. And the. The fact that you weren't intermediated, like for example, you go out and find your own expert, not necessarily you have to hire a recruiter that you could have experts publish information in different ways and not have to go through a magazine or a newspaper led to a huge explosion of lots of specialist and good information. And so all of that, I think was true. Now, it doesn't mean that in a little bit of you and I, Chris, right in Blitzscaling about some of the issues that when you get to a really big scale, you begin to have responsibility to society as a customer and you have to evolve what you're doing. Because now it's no longer just those early pioneers, that early discovery of all the raw stuff. But you have criminals and miscreants and bad incentive systems that create problems that you now need to further up your game. So we can go into like, what are the changes that need to happen as you begin to evolve? But that wild idealism was actually in fact a great way to start. So that as a baseline for saying kind of the principles of what's going on Web three, I think the answer is it's good. Which is to say, hey, there's a lot of really interesting potential here. There's a bunch of things that could be made that are spectacular. You have a whole lot of engineers and developers around the world working on this. You say, well, what kind of things? I haven't seen anything yet. And it's like, well, there have been a few things so far. There's been what is called, you know, think of it as gold 2.0 or digital gold. It's kind of an asset diversification, which is a good thing because actually in fact part of how we have stability in the modern financial system is have a whole bunch of different correlate asset diversification and other kinds of things to keep the financial system healthy and thriving. As you're kind of balancing between assets, I think you have seen some identification of protection of banking systems. So we of course in the west are with really good banking systems, or at least call it robust banking systems, go, oh, we don't need those. But Venezuela, Argentina, other places do. As a function of the fact that this gives you a place where a corrupt government can't kill your banking system or you, that same asset diversification can be a really good thing. Ultimately you could see your way to a much cheaper banking system that could then bring in the billions of people who are currently unbanked into the modern value of it. And then, you know, obviously, you know, today, if you're saying I want a cross border cash solution, it's actually in fact already one of the best cross border cash solutions. And I think there's all kinds of things you see happening from that. And what might happen with smart contracts and the theory by which Web3 folks are talking about this, which I think is very interesting, is say, look, what happened with the baseline Internet technologies is we learned how to ship bits around that didn't carry intrinsic value. They might have a lot of value as an essay or piece of information or communication or a video or a song, but they're not like themselves, carrying the value that money or contracts bring. Web2 brought in an identity system into these kind of communication and collaboration through kind of primarily real identities through LinkedIn and the social networks and other things. And then Web3 now brings in this open ecosystem by which you can create a platform of development on value systems, on assets like digital gold or currencies for paying things or contracts for doing things, or platforms for building new systems. And I think what you're seeing is a Cambrian explosion of lots and lots of efforts. By the way, of course, a bunch of them, just like web 1.0 will be shuttered craters. And maybe we have to be a little bit more careful about this because of the financial system. But some of those will persist in really interesting ways. And this is part of the reason why in 2015 I gave a talk at Davos and wrote an article for Wired UK on the fact that the world will want to have, I call them crypto capital systems. Capital is a pun on currency asset platform cap capital systems that will actually facilitate commerce and trade within the world. And I think this wild idealism is the right place to start.

And if I'm hearing you correctly, I think that in addition to believing that there is a real positive to this wild idealism, part of it is, I'm loathe to put words in your mouth but it's almost like there's revisionist history about the past where because we've just become so accustomed to the things that the wild idealism of Web 1.0 in the dot com era and wild idealism of Web 2.0 brought us that we're just like oh, it just brought us, you know, YouTube and Amazon, no big deal. And we're like no, hold on for a second. Look back to what the world was like before these things existed. These are actually a very big deal. It's just that it's human nature to become used to everything good and, and still focus on whatever irritants remain.

Exactly. And by the way, that human nature is also why we have made progress. And I do think that some negative features that weren't there before, before it got to the scale and a bunch of other things just like by the way crime goes up in cities because you get to the scale number of people and you say well we shouldn't have a city. You're like no, no, no, we should have a city and we should fix the crime, we should improve the crime. There's reasons why we aggregate in cities and it's the same other kind of thing is there's reasons why you know, getting these systems to scale still adds even more value but it comes with some prices that we should mitigate. And part of the thing of course is like obviously there's frustrations with flows of misinformation like the whole anti vax craziness and the fact that actually in fact any rational kind of set of thoughts pulling the other on the vaccine said a, you should get the vaccine for, for your own health, B, you should get the vaccine for your society's health and your family's health and your grandparents health and your kids health and all the rest of the stuff. And that the fact that it's been politicized and the fact that people are ignorant when it comes to science, even when sometimes educated people ignorant when it comes to science cause all this problem. And obviously it gets amplified by social networks now it also gets amplified by cable news and cable news anchors saying there's that vaccine as a democratic plot to put something in your arm. And you're like, yes, called life saving health. Right. So please do brand it democratic if you happen to be Republican in this case, just because it is actually in fact a good thing to do. And all of that is part of the cost that comes out. And I think we need to actually technology bases always cause us to refactor how we express our values. Not necessarily there are values. And like for example, the value of freedom of speech is a great and fundamental value, but also how do we morph it? What are the things that we say? We get the majority of the goods of freedom of speech without the problems. And like people say, well, we don't regulate any speech. And the answer is, of course we regulate a whole bunch of speech. We regulate child porn and terrorism and truth and advertising and a bunch of other things. Those are all speech regulations. We regulate speech already. It's just a question of where you draw the lines. Now we try to draw the lines with a maximum orbit against major harms and we just have to understand other major harms and then redraw with maximum orbit on major harms and how you do it and how you use technology in order to do that. And so I think that those are the questions of how you address some of the Web 2.0 stuff. Now that being said to what you were saying, not putting words in my mouth, but obviously we've worked together for a long time and you know, this is like we're ignoring all the benefits we're still getting from the Web 2.0 stuff. The fact that Black Lives Matter movement can go through, the fact that they existed. And part of the reason why I think we got a evolution on gay marriage and everything else was understanding and sympathy and the voices coming out within, oh, these are just people too. We're all just people together as a function of kind of cultural change. And all of those things come with it. And so people go, oh, because of this bad thing, you should roll back the clock. And the answer is no, no, no, we should always roll forward the clock and we should fix the things that are the bad things. And that's part of the reason why the revisionism tends to go, well, that's wild idealism. As opposed to, look, that was wild idealism. It didn't realize that we were going to run into some problems later. But by the way, you still had to have the idealism. And now the thing is not to look back and go, well, that shouldn't have been wild idealism. The answer is no. No, we should have idealism about how we fix the future. And that's the key thing to look forward doing. And I think that's the key thing. Like we're the first inning in the baseball metaphor of the web 3. So having wild idealism is a good thing, even though of course you should always pay attention to what could go wrong and try to steer towards positive outcomes and away from negative ones.

And if you have an idealistic point of view that says that things are only going to be good, that everything that comes down the pipe is going to be 100% good, you're going to be disappointed. But if you recognize that there are going to be issues that we can't foresee, but that we can ameliorate once we discover them, then all of a sudden the future doesn't seem quite so threatening.

Yeah. And also there is challenges in the future. But the question is, if you don't play forward to make it better, you're almost guaranteed to have more pessimistic outcomes. It's a point of naivete in the extreme to think that we can just enshrine the past doesn't mean that regulation can't have positive impact. I think it can can also have very negative impact or very limiting of the future impact. And the question is essentially how do we shape the future now?

In thinking back over the dot com era, the web 2.0 era, now, this nascent web 3 era, one of the summations I've heard people use is to say that the dot com era was about reading, the web 2.0 era is about writing, and the web 3 era is about ownership. I think it's very reductive to say that, but it's a clever way of describing it. And when I think about that, I'm like, you know, if I take that concept of web3 and ownership and compare it to web 2.0 and the creativity that it unleashed, it's something where we had a lot of new user generated content in the web 2.0 world. It's almost like we have user generated assets or user generated value in the web 3.0 world.

Obviously you're gesturing at NFTs and a bunch of other things which I think are an interesting. Like Most of the Web3 stuff comes out of what happens when you have a cryptographically secure distributed ledger which what are all the various applications that can be built on top of it? Which obviously includes assets, obviously includes currency, obviously includes banking, and obviously includes unique items like NFTs which can really much power more of the kind of creator or maker economy of which we're seeing all kinds of efforts and companies doing everything from subscription platforms like Patreon to new kinds of productivity software like Coda to, you know, various places to do NFTs like pinata. You see all of these things play into this. I don't think I would say writing and reading is Web one and Web two. I'd say writing and reading like kind of as it were, digital bits, content as Web one, Web two is real identities and relationships melded and navigate into that. And then I think at least bringing in a notion of digital ownership into it in Web three. Because, you know, obviously, you know, once you have a code cryptographically secure ledger, it isn't just digital assets that could be there, because what is our car ownership, it's like, well, I have this title. Well, that's a digital asset. So it's an entry into a ledger. That ledger could be a digital one. So there's all kinds of ownership that actually can play into this as well. And part of what I think is very interesting is the various ways in which ownership, we all tend to say ownership is I have this complete ownership. And actually, in fact, I think as technology evolves, we realize that ownership is a sophisticated relationship and you already see it in digital goods. Like, well, do you own that recording of the song? Do you own the written nature of the song? Do you own anyone who records the song, anyone who samples from the song? All of the stuff or questions around ownership that begin to enter once you have more sophisticated technology. And I think that more sophisticated technology always enters it. For example, it's like, well, I own a land. The stream goes through. Am I allowed to like poop in the stream? And you say, well, it's my stream. It's like, well, but the stream is owned upstream of you and the stream is owned downstream of you. So your ownership of the stream may not be that you can poop in the stream, right? You may still be able to, you know, like take some water and you know, and other kinds of things as a way of doing it. But, you know, you're not. This is again in the details of ownership. And I think part of what I think is super interesting about web3 is this notion of, well, since we have ownership as part of it, how does that notion of ownership evolve? And how does that evolve across our entire lives? Not just, oh look, there is the web space, there is the digital space, but everything that goes into our lives as part of it. And I think that part of the ownership part of it makes that arc of the three of the tale of three words that you sketched the vector and interesting in doing this. And I do think ownership is one of the key things, although, frankly, because I think part of what defines human society and progress is how we stand with relationship to each other. Like how do we find each other, what are identities, how do we ally, how do we form groups and societies and corporations and teams and how do we work together and collaborate together and live together are all these kind of things. And so one might kind of go to ownership of I own X versus how do we relate to each other? And that if you look at what I was saying is ownership is sophisticated is because I think that ownership plays into how do we relate to each other. So it's individuals together, as per the First Brook startup view, I to the we or I am the we as the way of looking at this. And that's the nuances around the ownership of Web3 and the kind of innovation and experimentation and efforts that I think will be. We're just in the first inning of it being super interesting.

Now, obviously one side of the concept of ownership is the kind of innovation that you're talking about. The other side is the phrase greed is good. And obviously greed is one of the seven deadly sins that you used as your seven deadly sins investing framework, which made you one of the Most successful Web 2.0 investors certainly. And Joshua Brustein again asked about these seven deadly sins, saying, using this framework, it seems pretty likely that if we look back at a mature web 3 a decade or so from now, the original sin would be greed. Given the amount of financial speculation in and around this movement so far, do you see that as a problem? So I guess the question is, is the original sin greed? And if so, do you see that as a problem?

So three kind of detail point of this. So one of the reasons why I started giving this talk to MBA students and I bankers and everyone else is because so much of the investing discussion was, you know, like, what's your customer acquisition costs? What's your operating margin, what's your predictable revenue? And a bunch of other things, all of which of course is deeply relevant and important in business. But like, when you're doing the invention of these new ecosystems, these new networks, these new marketplaces, all of that is important. You obviously you get to in kind of mature value, but that's not actually where you start. And where you start is what resonates with a large number of people and how they interact with each other. And so I use this to kind of wake people up, to make them think about it. It wasn't saying these sins are awesome. Hooray sins, right? I WISH we had 10, not just seven. But this question is the reason why they're identified as original sins is because they are things we all grapple with. They're deep in human nature. They're our appetites, they're our reactions. And the things that get to breadth have that tie, that reflex. Now, the second part of it, and this is of course part of the reason I wrote the Knight foundation essay, was to say that actually, in fact all always the goal, I think in more humanist entrepreneurship was how do you transform them? How do you take that initial hook and then get it into something that's better for society, better for the individual? That's part of the theory of moral sentiments is like, look, by being greedy, we are being of service to each other, right? Like, even though I'm trying to make a whole bunch of money and maybe even more money than you and competing with you, I do that by offering products and services to you that you can voluntarily purchase and that by doing so create an evolution both of society and the creation of value. But also that my interaction is how do I better provide service to you in order to interact. And so the third point is, you know, of course, when I was giving these talks about the seven deadly sins to various students, they'd always say, what's LinkedIn? And I would say greed. Because it's the economic, it's the how do I double my salary? How do I make more money? And. And what's the ways that I can do that? And it wasn't, of course that I actually think that only a minority of people approach LinkedIn going greed, you know, dollar sign stamped on their brains. But they are looking for economic fulfillment and so forth. And actually, in fact, that drive is part of what makes progress in society. Like, how do you get to pay for education? How do you get to pay for medicine? By creating productivity that allows us to invest and to have unique specialists who can be paid for and other things. This is part of the reason why back when humanity was mostly working on the fields, you didn't have the only people who could afford doctors were the nobility or the really expensive kind of merchant kings and so forth. Whereas once you get a whole bunch of productivity, we can now have doctors for more people. And that's part of progress in society. And so greed starts as that, but it transforms to a how do we make essentially a nobler society? So now to answer the question, you say, well, I do think, of course, with all the speculation, everything else, of course, one of the deep original sins in the hook is how do you make a bunch of money? Now I think one of the things that's interesting when you look at web3 is you can almost categorize projects. And I won't do this because I'm always supportive of entrepreneurship. But the ones that are missionary, the ones that are like, no, the world's better off this way, you may agree or disagree with their particular mission, but this is trying to change something still maybe make a much money. And the ones that are purely like, how do I make a bunch of money right now? Doesn't mean that one's good and one's bad. There's different kind of tempos and goals and other kinds of things and shape and who works on the project and what's coming out of it. But I think that all of that creating a new infrastructure. So for example, you say, well, is financial infrastructure good for the modern society? And the answer is absolutely yes. Then you say, well, do people go into banking? Are they like, hey, I'm doing a 501C3, this is my thing. It's like, no, no, a lot of people go into banking. It's because they're like, oh, I like being close to money, right? Like money is the thing I like to do. That's obviously greed, but obviously when you sublimate it, when you transform it theory of moral sentiments into other things, that becomes what's good. Now, obviously the challenge of where we are here is, is this is the very early thing and there is a whole bunch of wild speculation and some of it will be even probably fraudulent or misleading or bad in some direction. And that, you know, we'll wanna prune away from that and get to the good things. But we also wanna make sure that we're always targeting what's the good outcome here? Like a little bit of when people say stop that. Like, okay, you may be right stopping that. But by the way, if all you do is go around and say stop that, you're not shaping a good future. That should always be part of and more of this, less of that, right? Like this is the future we should be building towards. And so I think that's a moral imperative upon all of us who are builders, shapers, critiquers, commentators, is to say not only the, okay, not that, sure, fine, that's the only thing you have a handle on. But also. But this. But this is the positive. This is the thing we should be heading towards. And so, you know, yes, a bunch of speculation, yes, some of that speculation will be bad, but yes, let's build some new, you know, kind of instruments of value and banking system that help bring the financial part of our society to a new level.

And I think one of the things you wrote in your Knife foundation essay that really struck me is the fact that it is not easy to do what you just described to convert these base human sentiments into something of value. And I think one of the things you wrote, which is really important, is that it takes hard work. You said. You know, in retrospect, though, what I didn't sufficiently factor into my seven deadly sins heuristic is that the seven deadly sins are an enduring index of human behavior precisely because there's so much gravity in the behaviors they encapsulate. Effectively. Converting wrath into engagement and advocacy or envy into empathy isn't a quick or easy task. It takes persistent hard work. Because the work is hard, that means there's risk. The work also has costs that you as a platform developer could conveniently sidestep. If you were catering to or even just passively benefiting from people's negative emotions and appetites, your economic returns will likely be lower. And so I think that, again, it comes back to the theory of moral sentiments. This is a moral choice that people need to make. It is not purely an economic choice. They're going to choose something that may be even slightly negative to them economically but will be more beneficial to society.

Yeah. And I think, you know, I thought the Knight foundation, which was kind of focusing on all of these Internet communities and a bunch of other things, and the design, the basic design of the Internet, you know, had a bunch of luminaries. Tim Berners, Lee Vint Cerf, and sort of say, what now might you have learned or known that you would have liked to have done earlier in the Internet? And the reason this was my offering to that august group was that it was like, look, I was right about the sins, I was right about the transformation, but I underplayed how hard it was. And so starting earlier and identifying what the tool sets are for that transformation is the thing to do. And then I offered some of the ones that we Learned from the LinkedIn, because LinkedIn, we were doing this effort from the very beginning. Like at LinkedIn, you say, well, you're making some money from advertising and try to get people to spend time on site. No, no, LinkedIn, our tempo was always time saving, not time wasting. Right? Because time saving is better for your economic things. So the whole thing is every individual and groups better control of their economic destiny. And of course, this got us for years. LinkedIn's the boring one. LinkedIn's the one that I don't know what to do with. And the answer is because actually, in fact, we're just trying to be helpful when you're actually, in fact, trying to solve real work problems. And one work problem is looking for a job. One work problem is looking for recruit. But other work problems are like, you know, finding sales or finding advisors or finding people to collaborate with or finding co founders or someone to give you advice and make all of that much more easy and direct. And so we were always working on the transformation. And we just got around later to like, figuring out like, one of the key things that I put in the essay was that societies and groups are put together by leadership, by role models, by people leading groups. And it took us a while to build the LinkedIn Influencers program and to really start focusing on how do you make leadership work? Because I think one of the things that's in that wild idealism is to say, hey, look, leaders should all just be emerging from that Darwinian pack of, you know, who gets the most Twitter followers? And the answer is actually, in fact, who gets the most Twitter followers is not necessarily the best leadership, not necessarily on who you should be listening to, on what the leadership should be. And so putting some effort into defining the institution and structure of leadership so that leaders direct society in a better way through the structure of the institutions is one of the things that I think is pretty fundamental in terms of how do you play this? And that was one of the things I would call my younger self and say, work on this earlier and get this going earlier. And then the other question is more broadly is how do you make the terms of this transformation? How do you. You hook from these. The original sin agreed into much more valuable things for individuals and society. And how do you, how do you build them?

And it sounds like, again, if you think about the transformation that's occurring, you have these technologists, entrepreneurs and investors with Web3, they may be using greed as this hook, but if they are thinking carefully about how they're actually structuring the. The things that they're building and building towards outcomes that are not just purely based on greed, then you can actually use that ostensibly negative emotion or negative desire to power a positive result.

It's exactly that. And it's kind of a question of just because you have an appetite or just because you have something that we would describe as a sin or as a negative emotion doesn't mean you're bad or anything else. It's a question of what you do with them. It's a question of how you. So, for example, if you get angry with society and you go out and you serve in the food kitchen because you're angry about what's going on in society, it's like, well, you're channeling it to a good result. If you get angry and you go out and break windows and attack people, then you're channeling it to a bad result. So the fact that you might have wrath, the fact that you may have that impulse isn't itself. Now, Buddhist monks will tell you, no, no, no, you should try to get rid of the wrath itself, which is not unwise meditation, all the rest. But if you have it, that is not itself bad. It's a question of what you do with it or how you act. And that's part of the reason why the transformation is so important.

Now, leaving behind the seven deadly sins for a second, I think one of the other elements of Web3 that Joshua really focused on is the notion of decentralization. We hear it from decentralized ledgers to decentralized finance or defi. As Joshua points out, decentralization and democratization ethos has been an element of each of these new generations of digital.com, web2 and today web3. So how achievable is this kind of decentralization? At times it seems like we've backslid towards a new kind of centralization, right? We have these dominant projects, we have these dominant companies. Is centralization inevitable?

Well, I think what happens throughout all the history of human society, I think there's another grand history like Jared Diamond's or Yuval Harari's that's in this dance of centralization and decentralization. And I think part of how we make progress is we get centralization in the cities and we have farming and so forth, and that allows us to have more human beings and allows us to get what Marxists refer to as surplus labor and other kinds of things to make perfect progress. And we're not just sustenance as we progress. And I think you know, some of that comes from various forms of centralization technology. By the way, this is the thing that's fictional here. It's mostly as a centralizing force, not as a decentralizing force. By the way, technology emerges out of centralizing because we'd like, well, if we have together a town and we have someone who can, who can now be a toolsmith and can be tinkering with tools and making better tools, you can make better plows and you can domesticate, you know, cows and dogs and, and chickens and you can have chicken coops. And that tool cycle is a really important part of this. And that's, you know, part of that centralization loop. Now, that being said, part of that earlier thing is you're balancing between centralization and decentralization because part of it is to say, well, shouldn't we just all then be a command economy? And you know, everything stems from one autocrat leader on down saying what do? And the answer is, well, we found that that's a very inefficient system because people don't feel co ownership, they don't feel innovative driving on the thing that they own or want. And so we should be enabling that decentralization. And that decentralization is part of what creates an effort at meritocracy and an effort at making more talent, be able to have more amazing results. And obviously, I think our talent in society is to say every person can deploy their talents to their best available abilities and then get some benefit from it. Is generally speaking where we want to strive towards, where we want to be towards. Whether or not the perfect utopian outcome is ever possible, you know, seems unlikely, but it does seem that we could get better and better. And that's where some of the effort to how you balance centralization and decentralization comes in. People can create their own business, they can kind of own their own business, can own their own house, you know, they can direct some of their own labor. And by the way, then when you get to the Internet, people can express their own voice, they can build their own new businesses, they can chart different kinds of jobs than the jobs that existed before. You can enable more entrepreneurship. And all of that is part of what I think is good as you're getting to decentralization and obviously the Web three, when they're getting to it, is to say, well, look, part of the reason why there's been a lack of innovation is because the banks hold on to their kind of oligopoly and, and banks say no, no, we do lots of innovation. And it's like, well, okay, so let's see what kind of innovation has happened within the payments industry on Visa, MasterCard and Amex. And the answer is almost nothing from within that system. It takes outside parties. Obviously, one of the things we really working really hard with PayPal back in the day, but everything else and a way to create those new possibilities and new kinds of innovation and, and part of that decentralization allows it to be these questions where it allows this decentralized innovation as a way of playing for it. And that, by the way, decentralization to allow entrepreneurial innovators is one of the things that's created a huge amount of value. And, you know, part of the reason it's so hard and part of the reason there isn't a lobby for entrepreneurship and all else is like, well, what are they gonna create? And it's like, we don't know, right? But we hope it's gonna be great. And obviously you have to navigate. Cause sometimes it's not so great and so forth. But that new thing, like people didn't necessarily think Netflix when Darpa net was created, they didn't think eBay when Darpanet was created, they didn't think Wikipedia and Search. But as it all played out, these all now become part of our everyday lives and how we navigate things.

Well, I think there's a certain poetic justice in beginning with Adam Smith's Theory of Moral Sentiments and now coming around to really, Adam Smith's wealth of nations, as we've been discussing the. The importance of these kinds of things. And one final question, and it's an opportunity for you to put on your oracle's hat, if you will. Joshua asks, how much do you see the current moment in tech with the spike in enthusiasm for the metaverse and Blockchain? They're separate, although obviously there's some overlap. As an opportunity to rethink the basic assumptions and architectures of the current digital architecture, or in other words, how can we, as you put it in your Knight foundation essay, both empower individuals and transform the madness of the masses into the prosperity and, well, being of the crowd.

A couple of points. One, we're already in the metaverse. You and I are doing this through zoom. The Internet's already a version of the metaverse. Now, what most people mean by the metaverse is, you know, things like Neal Stephenson Snow Crash, or you know, kind of Ready Player One. So when you get to the avatars and the fully of the world and look, I think we will get those. I think we will get those probably first through entertainment versus anything else. And I think that there's a bunch of interesting things that can come out through the Metaverse. Matter of fact, my very first product management job was for Fujitsu Software Corporation doing Worlds Away, which was a 2 1/2D virtual world. So you know, kind of Metaverse from the early days. And of course I was drawn to that in part because of having read Snow Crash and going wow, this is kind of interesting. Now Snow Crash itself has kind of called it a mixtopia, both utopia and dystopia in combination, but it was wildly creative. Even today, kind of super interesting. And obviously when you begin to put together items of value where you can create NFTs and create Maker economy and have services of all court, including digital services, you can begin to interrelate those things. And so as an opportunity to rethink basic assumptions to build new architectures, that's precisely as we get to each of these levels is one of the things that is precisely one of the major opportunities in so doing. And so we should be focused on that as consumers, as investors, as entrepreneurs, as technologists. And LinkedIn is obviously my own personal hands on effort on this. Although I've also of course been delighted to be part of the founding team of PayPal and one of the earliest investors in Airbnb and everything else. But how you get the individuals in the society both massively better off and it's one of the reasons why both of Adam Smith's books are in my highly recommended list.

Well, I can't think of many better ways to kick off 2022 than with a look at the and what we can do to shape it. That concludes this episode of Gray Matter. You can subscribe to gray matter on soundcloud.com greylock partners. You can also find new episodes and blog posts on greylock.com and you can follow Greylock on Twitter reylockvc. I'm Chris Yeh and on behalf of Reid Hoffman, thank you for listening.