Max Brun explains how Web3 marketplaces differ from Web2 platforms like Craigslist and Upwork. Web3 uses tokens for ownership and governance instead of corporate equity, and can bootstrap network effects without marketing spend. Braintrust hit $35M in gross service value in its first year with zero marketing budget.
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Like, what do you mean when you mentioned like Web3? So we can kind of get a good understanding. Yeah. So yeah, it's a great example. So, all right. So let's, let's like first cover like what the fundamental things of like Web2. So there's, there's been these kind of like 3 core phases of marketplaces. Like let's say that kind of the Web1 marketplace, and I would call that like the Wild West of Craigslist, right? Like it essentially brought aggregated supply and demand and enabled like transactions to occur, but there was no escrow services. There was nothing that— there was no payments, et cetera. So it was kind of a mess. What happened in Web2 was basically these kind of core innovations that happened mainly with the mobile phone, which is this introduction of escrow, this introduction of payments and ratings and reviews and other trust mechanisms. And you see that kind of proliferate and it basically formed that— those core innovations formed the foundations for Uber and Thumbtack and all of these kind of Web2 marketplaces that we see today. And that's been the predominant business model. These have been the biggest wealth creation events of the last 10, 20 years. And so I would say that those are the fundamental kind of innovations in Web2, which is take a much larger fee out of the transaction, process the payment, provide escrow services, and basically take a 20 to 40% rake out of the transaction and essentially raise billions of dollars of venture capital and just crank up the flywheel and essentially do that over and over and over again. The core innovations of Web3 marketplaces would be I'll say like for many projects, kind of like replacing that typical like ownership and governance structure of like a Delaware C corporation, essentially with a token and giving that token away to the users that help build the network. And then letting those tokens essentially represent governance and owning and control. So I'll give you kind of like an example, like like a, let's say an Upwork example. They're kind of like a Web2 example. So they go and raise billions of dollars to go and like spend a bunch of AdWords and try to attract like supply and demand into their network. And then they take a 20 to 35% rake out of the transaction. And all of that goes to the shareholders of Upwork, right? In Braintrust, there is no equity. The sole unit of ownership and control and governance is the BTrust token. Now, we don't spend a penny on marketing. We never have and never will. We have this year, in our first 12 months, we'll do about $35 million of GSV in transactions with $0 in marketing spend. All of the clients and all of the talent come from talent and clients referring other talent and clients and earning BTrust for doing that. So it's this incredible tool to be able to kind of bootstrap network effects and cross the chasm that most marketplaces fail in, this kind of bootstrap phase of getting enough people to kind of show up in your sandbox and play. So that's like one of the core innovations is essentially using the token to bootstrap network effects and also to proportionally give ownership and control to the people that help drive the most value to the network. That's like kind of innovation number 1. And then innovation number 2 is enabling governance to happen in the networks. So like, I'll pick on DoorDash here for an example. A couple years back, DoorDash enabled tipping, and then they kept all the tips and they booked it as revenue. They essentially stole the money from the Dashers. That would be impossible in the Braintrust network because if you wanted to change the fee structure, you would have to put that out to a vote amongst the whole network. Anyone that owns a token can vote, and it's a one-token, one-vote system. So people would have to vote to essentially have fees stolen from them, which would never happen. And so that's kind of the second innovation, is essentially a real democracy in these networks where it's egalitarian and people get to vote and control the networks. And then the third is is essentially the fee structure. So if you're a user in this network, would you vote to have fees be really high on yourself? No. Why would you do that? And so our fees to talent are 0%. They pay a 0% rake. And so you can see how it could be a pretty attractive model, right? If you're coming from an incumbent Web2 marketplace, you come to Braintrust, you pay 0% fees instead of 30%. And you actually get to earn Btrust for inviting your friends and inviting clients. Oh, guess what? Like you get to own and control the network. Like those are pretty strong incentives to leave incumbent Web2 marketplaces and join Web3.
