A friend emailed me last weekend about his project, and this line stuck out.
Am I just not finding the right pockets, or is the whole market shrinking?
This is in the context of a web3 project launched during what could easily be called a hype cycle. What I’m sharing here is an observation and is by no means something I can back up with data, it’s just my feeling about the state of things.
Timing is challenging to get right in startups. In every case where the timing was wrong with things a team was working on, there was a sense that if you build it, they will come.
The truth is, for most startups, this is the case. You’re building it, but you only know once you know, and you’ll know when revenue starts flowing in. That was certainly the case for me multiple times and feels very top of mind given this week’s FedNow news. The article on the left is from Forbes a few days ago, and the article on the right from 2015.
These articles aren’t about web3, but real-time was just about as provocative for banks 2011-2015 as web3 tech is today.
There is undoubtedly less excitement about web3 than there was 6 months ago, and the underlying technologies were hidden in a hype cycle unrelated to the technology. The exciting thing about the shift currently in various projects is that the technologies can be used because they are the right tool for the job. Not because they fit a narrative.
Using various web3 technologies though, is not enough of an accelerator to warrant building with them unless you’re applying the technologies in a way that actually gives the project a meaningful strategic advantage in terms of cost or experience.
Hype cycles are helpful for many things including massively subsidizing the cost of R&D across a technology stack. Things that were difficult to figure out a few years ago are now free and open source. Projects that were closely held and never launched have now morphed into something else. Some closed projects became open ones; Transparent Systems comes top of mind.
There are many reasons investments in a sector slow down as the hype cycle normalizes, and I assume that to invest wisely, you have to understand the technology more deeply than others. It means intentionally learning more, investing more, and building alongside the teams you invest in despite trends changing.
Once the hype cycle is over, the question is, what technology is here that the timing is right for?
Hype cycles obfuscate timing because, for a time, everything looks like a good idea.
Even if you can see the future, timing is still a bit of luck.
Timing is hard.