It’s the data…
In 1994, when I first started investing in the Internet, I intuitively understood that an open, public, permissionless data network undermined the market power of existing media companies and made it possible for small start-up companies to reach global markets quickly and cheaply. I did not understand the implications of the Internet’s defining characteristic… that it does not remember anything.
A computer scientist would say the Internet is stateless. When a packet moves through a router on the Internet - a nanosecond later that router does not remember that it passed that packet - much less where it came from, where it was going or what was in it. I now understand this characteristic - the thing that makes the Internet so flexible, resilient, and efficient is what created the opportunity for Google, Apple, Facebook and Amazon (GAFA) to become the dominant new incumbents. These services were quick to understand the value in the data users contributed as they interacted with them. Later, we all began to understand that each incremental data point added value to those previously collected. This “increasing marginal utility” of data is the mechanism that underpins network effects. It has led to a small number of players amassing an enormous amount of market power, making it more difficult for start-ups and slowing innovation.
Software developers now know the importance of avoiding the GAFA “kill zone”. Some do that by scaling back their ambitions and competing in the few remaining niches where GAFA is not present. Others look to change the basis of competition by changing how they treat user data. Web 2.0 developers treat data as “the new oil” - a scarce resource to be acquired and exploited. Web 3.0 developers now see that hoarding user data is a liability, and that giving users control reduces the cost, complexity and risk of managing that data while also enabling more powerful online experiences. It also directly challenges the Web 2.0 business model of “user as product” forcing the dominant incumbents to either forgo current revenue and market power or allow Web 3.0 developers free reign to pioneer new business models based on giving users access to and agency over their data.
In the technology market, a shift in the development paradigm has always shuffled the deck and created opportunity for new entrants and new tools. We are thrilled to announce today that Placeholder led a $2.5mm investment in 3Box, a company based in New York and Berlin dedicated to the proposition that users should have an interest in their data.
Michael, Danny, Joel, and the rest of the team at 3Box have created a system that allows developers to build engaging, performant applications without the liability and cost of storing and managing data on a central server. When data is stored with users, it is inherently more secure, it can be used by different services simultaneously in a way that vastly improves the user experience, and is the foundation of a new market architecture where, services come to the user’s data rather than users going to the service’s data.
If you are a developer, you can use 3Box’s JavaScript SDK with APIs for profiles, storage, and messaging to quickly create a Web 3.0 application that respects a user’s interest in their data without asking them to give up the performance and ease of use they have come to expect from the web. Get started building on 3Box (github.com/3box/3box), or better yet check out their jobs (3box.io/careers) and put your shoulder to the wheel to help “re-decentralize” the web.
If you are a web services user, imagine what the world would be like if you had the same access to and control over the data you create on the web that you do over your email inbox. If you want to be able to search, delete, export and share that data on your terms, you can find some of 3Box’s early partners here. You might also want to start asking your existing service providers hard questions about your interest in the data you contribute as you interact with their services.