Venture capitalists are the new narrators of crypto

That’s a big problem, and not for the reason you might think.

Hi, and welcome back to Untangled. Last month I decided to write about a phrase that has always driven me a bit bonkers — “tech for good” — and then interviewed Eileen Guo about her excellent investigation into WorldCoin. Katie Detwiler, Untangled reader and Assistant Teaching Professor at The Stevens Institute is going to draw upon both pieces in her upcoming course, “Computers & Society.” That’s exciting news!

This month I’ve written about how Venture Capitalists are becoming the narrators of crypto, and why that’s a big problem. It’s not for the reason you might think.

Going forward, if I come across an article that relates to something I’ve written in the past, I’ll link it at the top of the monthly essay. Here are two from this month:

• 📉 Remember how Hilary Allen said that the only thing preventing a collapse in DeFI from impacting all of us was banks entering the fray? Welp, it’s happening.

• 🤑 In March, I wrote about how tokens might turn creators into stocks and their audiences into investors. Well, this New Yorker essay reminds us all that crypto isn’t necessary to financialize people.

Now on to the show!

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Steve Jobs once said, “The most powerful person in the world is the storyteller. The storyteller sets the vision, values, and agenda of an entire generation that is to come.”

Jobs instinctively understood the power of narratives. At scale, they become “instruments of political or market power,” as Jens Beckert and Richard Bronk write in “Uncertain Futures: Imaginaries, Narratives, and Calculative Technologies.” So here’s my question: who will narrate the future of Web3? Let’s dig in.

Over at least the last 30 years, technology’s relationship with society has been shaped by a narrative fight between technologists and financiers. In Web2, according to Ian Bogost, the technologists successfully framed bankers and financiers as “indolent parasites who made nothing and preyed upon the inventions of others.”

As Web3 has evolved over the last decade, there have been at least three narrators. The first two are:

1. The ideologues, led by Satoshi, the pseudonymous creator of Bitcoin. In the early days ‘Bitcoin’ was pretty much synonymous with ‘crypto’. Satoshi spun a tale of freedom from government control and financial intermediaries through a ‘censorship-resistant,’ ‘self-sovereign’ monetary system.

2. The technologists, led by Vitalik Buterin, founder of Ethereum, tilted the narrative power away from the ideologues and the beliefs ascribed to the technology, and toward the sociopolitical experiments and practical applications underpinned by the technology.

Now, as Web3 becomes fully financialized, a new narrative star has been born: I wish it were Lady Gaga, but it’s the return of the financiers, and in particular, the Venture Capitalists.

🏦 VCs are everywhere in Web3. Why? Well, it’s illegal to sell an unregistered security, but it’s totally a-ok to sell one to an accredited investor, like a venture capital firm. More than that, the demand exists — a16z recently raised a $4.5 billion round of funding — and the profits can be astronomical.

Okay, so why the shift from technologists to VCs now? Well, Web3 is undergoing a period of what Beckert and Bronk would call “radical uncertainty,” and VCs offer “a road map that helps counter anxiety in the face of uncertainty by simulating possible outcomes and making them feel tangible.” (Do Beckert and Bronk sound like your therapist too??) So, in this moment when the future seems especially unknowable and uncontrollable, VCs are using narrative to provide us with a feeling of control and predictability.

Just talking with the narrators of crypto, trying to figure out how to navigate these uncertain times.

You may be thinking that ever since it hit our newsfeeds, Web3 has always been shrouded in uncertainty and unknowns, such as regulation, the technical scalability of blockchains, or whether ‘ownership’ is guaranteed by law, etc. But it’s clear that Web3 has now hit radical uncertainty, especially if you consider the recent massive market downturn which revealed systemic bugs. Uncertainty is through the roof! Back to Beckert and Bronk:

“In conditions of radical uncertainty — where the set of possible states of the world is unknowable — you have no choice but to rely on imaginaries and narratives about the future. Think of tech start-ups whose value is sustained by little else but narratives of future profits. Such contingent imaginaries serve two purposes: they structure expectations; and they reshape the future by motivating behaviour. In this way, imagination is a root cause of novelty and uncertainty, as well as our best tool for coping with both.”

This level of uncertainty naturally leads to questions about what the real value proposition of Web3 actually is. In response to all this, VCs offer due diligence and investment theses that attempt to “justify and legitimize decisions despite the uncertainty faced,” by regularly repeating such refrains as ‘it’s still early,’ and launching media properties like Future, which promises to be “the go-to-place for understanding and building the future” and practice “rational optimism about technology and the future.” In other words, don’t focus on your precarity or anxiety about the present, look over here, ‘extend your time horizon,’ and read about some great new technological innovations! 😉

So narratives shape our visions for the future and structure our decision-making in the present. But the problem is, VCs are unreliable narrators — and it’s not because they’re out to serve their own self-interests (well, not just because of that). Rather, venture capitalists’ biggest weakness in narrating the future is their sheer undying excitement for technological innovations, which is rooted in a ‘techno-determinist’ belief system. In short, VCs subscribe to the notion that “technological changes force social adaptations, and consequently constrain the trajectories of history,” as philosopher Sergio Sismondo put it.

Now, obviously, you wouldn’t be a very good VC if you didn’t care much for innovations in technology — that’s a huge part of the job. But this is a big problem because it often leads VCs to conflate technological change with societal change; therefore, outputs such as a new healthcare app become indistinguishable from outcomes, such as improved access to healthcare. So in this way, VCs don’t even try to imagine new futures — they simply imagine new technologies.

Mistaking technological change for societal change is what underpins a dangerous ‘let’s build’ mentality, and drives the narrative that the world can be ‘fixed’ if only we plastered more new technologies over the top of it. For example, Li Jin, one of the co-founders of the Variant Fund, recently wrote an essay, “A theory of Justice for Web3” which argues that “Web3 presents the opportunity to build an entirely new internet — indeed, new economies — from scratch.” As if we can ignore how power dynamics structure existing social systems!

At times like this, we should try to look away from dominant narratives to alternatives: I found Afrofuturism very helpful in this case. When building visions for the future, Afrofuturism demands that rather than reimagining technology itself, we reimagine the social systems that shape and are shaped by technology. As C. Brandon Ogbunu put it “Futurists ask what tomorrow’s hoverboards and flying cars are made of. Afrofuturists ask who will build them? And does their commercial use fall out of their utility in military or law enforcement?”

What Afrofuturism does here is reframe ‘the future’ away from VC-centric questions such as ‘what industries or technologies should we invest in?’ and towards more sustainable thinking, like ‘what outcomes should we invest in, who are they for, and who gets to decide?’

We can see quite clearly how the sole reliance on VC narratives steer us into missing the point entirely: take Marc Andreesen, the founder of a16z, who often gets credit for predicting the future in his essay “Why Software is Eating the World.” In it, Andreesen predicted that software companies would disrupt incumbent businesses. As that prediction started to play out, he became “The Man Who Makes The Future” and “Tomorrow’s Advance Man.” But Andreesen’s essay was perhaps more remarkable for what it missed: software has also encoded and perpetuated existing social inequities in sectors like employment, K-12 education, health care, and criminal justice. The enormous blind spot in Andreesen’s view of the world is that tech doesn’t impact social systems — rather, the two are entangled.

Ogbunu explains how Afrofuturism can help eliminate these blind spots — because the Afrofuturist has a completely different perspective: “The Black experience is defined by a historical struggle for existence, the right to live, to be considered a person, to be afforded basic rights, in pursuit of (political, social, economic) equality. Because of this, the Afrofuturist can see the parts of the present and future that reside in the status quo’s blind spots.”

We’ve been saddled with the techno-determinist, ‘let’s build’ mentality for a long (long!) time. I started with a Steve Jobs quote to make a point — the technologists won the narrative fight over Web2. But this assumption that more technology is always better has been disproven over and again: trying to build on top of old social structures doesn’t displace them, it often crystallizes or entrenches them. Insisting that Web3 is ‘starting from scratch’ with a new ‘fair and just’ internet doesn’t make it true. Systems cannot be reformed this way — so it might be time to listen to a new cadre of narrators: those who understand social systems and how they’re structured.

Thank you to Georgia Iacovou, my editor