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How will the coin circle bull bear cycle and encryption evolve in the future? Look at Sequoia Capital

Time : 20/07/2021 Author : tu16ih Click : + -
        Sequoia Capital was founded in 1972, and it has been just 50 years this year. Sequoia Capital is the undisputed leader in the field of global venture capital. Since its establishment, Sequoia Capital has successfully invested in giant companies such as apple, Cisco, Oracle and Google, witnessing the shining moments of legendary enterprises one after another. This article is from unchained talking about two partners of Sequoia Capital, shaunmaguire and michellebailhe. The former has opened five companies and succeeded in three. The latter started in McKinsey and later served as the team leader of the Silicon Valley creative laboratory. Highlights of the interview: what are Sequoia's long-term views and arguments on the encryption industry? How will our lives become different in 20 years due to blockchain technology? How does Sequoia decide whether to invest in the entity behind the project or token? Does it violate the spirit of decentralization to involve venture capitalists? How does Michelle view the macroeconomic environment that affects encryption assets, And whether this cycle is different from the previous cycle, what encryption projects should pay attention to and the business model they should pursue, even if there is no clear regulation, how encryption founders should always do the right thing, the future of the meta universe, and how to define the mental model of the encryption industry and realize the stage of global landing.
 
        Compere: I heard that Sequoia has launched a $5 / 6 billion encryption fund. According to the news, the fund is to lay out encryption assets in the next 20 years, so what is it? Michelle: the encryption industry is quite mature in technology and application. Interestingly, the question we have been asked recently is whether our beliefs have changed. Of course, the answer is No. That is, encrypted assets have created a new asset category and computing platform, and there will be business departments that provide services for these assets at the same time. As you know, many financial businesses develop DAPP on decentralized platforms in a combination of centralization and decentralization, so we have been continuing to invest in these projects, including layer2 infrastructure and applications in the core layer, and expect to see more good development in the next 20 years.
 
        Shaun: first of all, I think it's hard to say. You know what encryption assets will be used in the next 20 or 30 years, which is similar to how to use the Internet in the 1970s and 1990s. I personally believe that all money will be digital in the next 20 years. For example, the US dollar may become a digital tool of the government, and the adoption rate of decentralized currency will be greatly increased, especially in developing regions around the world. The current situation of uniswap is a good case, that is, you can use some very simple code to make some very high transaction volume businesses run forever, and there is no need for people to maintain it. Just release the code, and it is there.
 
        I think there are many such examples that can give me a glimpse of the future, but you know, it's hard to predict in detail. Michelle: I totally agree with Shaun. I imagine that something like the Internet is fundamentally an information revolution, so it is difficult to predict. Just like we couldn't predict that the Internet would become what it is today, no one would predict that Google / mobile Internet would happen today, but they were born. Now we can book taxis on mobile phones and hotels anywhere, just as we couldn't understand at that time. But an obvious trend is that billions of people will have more information than before, and the cost of sharing information / transaction information will be greatly reduced. I think this is consistent in all businesses, except that it is difficult to say exactly what form it will take.
 
        And you know that today's Internet services are different in terms of censorship and regulation. I think this does not mean that the old will disappear, but we will have more choices. Compere: at present, most of the successful large venture capital companies come from the old investment model. Now this kind of start-up companies or VC companies are very similar to centralized companies. In order to adapt to this new investment model in the decentralized new world, some restructuring and a large number of tokens must be invested. Are they really decentralized? Shaun: I agree with you, but the encryption industry has many differences. Although encryption and traditional business have many similarities, for example, you agree that engineers and product personnel need to be hired to help build the best public relations and products. You need to pay and manage them. There are many similarities between the establishment of encryption companies and the establishment of traditional software business companies.
 
        But it's really not like what people think. You know Sequoia has existed for 50 years. The biggest victory of early investment is apple, Atari and some other hardware companies. Then in the late 1980s and early 1990s, the most successful investment of Sequoia Capital is the Internet infrastructure company. Everyone knows Cisco as an example, and we don't know the core infrastructure of Oracle. Whether it is really decentralized is not in the surface mode. Moderator: let's talk about your investment in encryption projects now. There is a centralized entity behind many agreements, so you can choose the token of the investment project or the equity of the centralized entity that starts the decentralization project. For example, I know you invested in filecoin, so I'm sure you can choose to invest in filecointoken or protocol laboratory. How do you make a decision? Michelle: most of the time, the problem we need to solve is the consistency with the founders. We will require matching tokens, which is very important.
 
        Now there are examples of inconsistent incentive measures everywhere, which will lead to unsatisfactory results. Of course, non encrypted assets are only a broader application of technology, so we always try to promote shareholders of equity and discuss the share and proportion of token. Now tokens are widely used in encrypted assets, but in fact, there are many different things in my mind. Some things look more like commodity relationships. They are native tokens used to stabilize or protect networks (such as bitcoin or Ethereum or anything else). Then you may have tokens related to the success of applications, and then what you have just looks like reward points, as if it is basically airline miles, It's like it has nothing to do with business, but it's just a trade discount or something you like, supermarket points or airline points.
 
        You have other things, you have dog money, or anything else you want, so what we call token actually depends on the business and the content they are building. If it is something like reward points, you know we may not care, because these are of no value to us, because we are not the users who will inevitably trade on it, so we may only care about becoming equity shareholders in other cases, What we may really care about is the application or both, and then for the first layer, it is only the right of the first layer, which is where the value accumulates, so its scope depends on the content being built and how you deal with the attitude of some members of the encryption community.
 
        Moderator: I have to ask a follow-up question, because obviously, you know Sequoia has invested in start-ups, such as doordash or airbnb. You may have heard some encryption entrepreneurs say that decentralization means that they will have tokens to motivate different workers. So when you consider what kind of products or services you can provide on the Internet, how do you decide that it is more meaningful? Whether it is provided by a centralized entity or in a decentralized manner, or when do you intend to invest in encryption companies? Shaun: this idea has been very popular in the past 20 years, so now it is a little uncertain. The main difference is whether to hand over the ownership of the early network to users to help stimulate early program guidance.
 
        Therefore, there will be some differences at the beginning, but the final state is not important. As you know airbnb, suppose you have a decentralized airbnb, and you give up 50% of the equity as a token to motivate early users and early hosts, as well as everything you own after you reach a certain scale, but competition is also emerging in endlessly, and people like to use the best products, And good products mean having the most customer groups, the most liquidity, better services, etc., so I just want to say that the only difference is whether to give up ownership in the early stage to help stimulate use, but in the final analysis, you must have better products, because if your products are not better than alternative products, people will leave and do the next thing.
 
        So I think this is actually something that many Web3 companies don't pay attention to. Michelle: I agree. This desire for unfettered decentralization is becoming more and more popular. I think when you really study it in depth, running decentralized things is actually inefficient. It requires more computing resources and more coordination to ensure that it can be done well. Therefore, with the passage of time, our expectations for its realization are actually very extravagant. You want to use it to do the most important things, and this is like pursuing stateless freedom. You know, value storage and public information network are as important. You don't want a government or a company you know to become the only one to control, so this is a bit like the common problem that mankind has been facing. People have been looking for how to best organize the government or people. We can centralize democracy and make it more decentralized, However, this requires a lot of cost and participation, so in order to achieve the final desired result, and in other things, in order to facilitate access or speed and optimize decentralization, the centralized business model is adopted.
 
        As another example, someone said that if you consider what Google is doing, or if the problem you are solving is to change the existing advertising business model, you will know that some Web3 startups pose a great threat to Google. It's a great way for billions of people to get free information and fund them through advertising, but it's difficult to do this by charging these people. If what you want is not to get private information, not to sell advertising, and you may need something with more security and control, then you won't let billions of people access the same information they can't afford to pay a price, But it may be a small group that can access it, so in fact it is only a different choice, so we think it allows centralization, or this blunt decentralization tool always at all costs.
 
        I am happy to use centralized things, because it may be cheaper and more convenient. Host: there are too many news recently. Let's start talking about the bear market in general! Bitcoin was launched during the last global financial crisis in 2008. Crypto assets mainly exist in the U.S. interest rate environment of about 0%, so what do you expect to happen next year? What stage do you predict we are in the encryption industry? Michelle: I think this is just to prepare people when they see things. In the encryption industry, encryption trees have grown higher. Therefore, when it is hit, it will also vibrate more severely, which does not mean that it will disappear. Or just like the number of dollars, it may be more in number but its value will decline, because they have more volume.
 
        The changes and fluctuations in this period will feel greater than before, because we have more users, more dollars, more liquidity, and more regulatory attention. These are encryption assets that have never been before, so it really just tries to prepare people. Moreover, encrypted assets always go through cycles, but there may be some unique elements that make it feel different and prepare for it. I think it really depends on the business you operate. As for how you should react, you know that some of them may be active in a large number of retail transactions in the past few years. You know that they may need to plan a future environment at a very low cost. The difference is, Retail interest may decrease, but it can't be zero, but less than before. And you have seen that the trading volume of many large listed companies engaged in brokerage trading has decreased significantly since last year, obviously because last year was a historical high, but this doesn't mean that it will disappear, but you just need to plan for this difference, so this is what we have been trying to talk with our founders, that is, to realize that, This is a different environment. If you continue to do what you are doing in the past two years, you may soon find yourself trapped in quicksand, so you should recognize that the environment has changed, and make corresponding plans for some people you will know, focusing on certain product areas or difficult transformation, which also depends on who you are and what you think, but the message we just want to convey is that this is a different plan, Plans that can be prioritized.
 
        Host: then I want to ask you the last point in your post is that you said to establish a sustainable business token, but not a business model. What kind of business model do you think will play a role in decentralization? Michelle: you know token is a really cool invention, like there are some very cool things in terms of regulatory dynamics. About finding this way to really get incentives, you know that there are many very interesting places to reward users and early developers, and many people will use them again for real value, such as Ethereum, bitcoin and many other similar things, It is indeed useful in stabilizing and protecting the network. There are other places where you know it works, but there are many other projects that have no real value.
 
        In the encryption boom of the past few years, people are very excited. Maybe things are going well, everything is trading, and you may see a lot of growth. Then you think, God, we are doing something amazing, and it is playing a role. But once the interest rate environment changes and starts to flow out of the market, when liquidity does not exist, you will see the value of the project disappear, which is the situation of many projects now. Just like you can't see whether there is such a business model by looking at the rise of token, just like there is no token. If you just keep getting valuation growth from investors, but many other health indicators don't exist, it doesn't mean that the business model is truly established. Therefore, you should really understand what the actual business model is, what the products or services people actually pay you, and how it works, Then what is the relationship between it and assets? It may or may not be related to business. This is an important question.
 
        Host: do you have any expectations about what the metauniverse will become? Do you think VR and AR must be part of it, or do you think it is not necessary now? Everyone is talking about the metauniverse, and I don't think there is a good definition, so I'd like to hear your thoughts. Shaun: Oh, my God, you're asking me a problem! I think of the metauniverse. I agree that there is no good definition of the metauniverse at present, except reading Neil Stevenson's book, and I like the metauniverse he describes, which is obviously the metauniverse of our ideal life. In any case, I think the metauniverse may have two different ways. One is just the next big stage transformation of the Internet, which is difficult, and I don't even know what it will be, but just like when the Internet evolves from today to the unknown future, I will call it the metauniverse.
 
        And I think a certain type of spatial components may be one of the important attributes. For example, we invested in a company called gather, which can easily
 
        
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