Welcome to the bubble.

March, 2023.

I’m calling it. 

Here are the conditions that in my mind, mark the start of the web 3.0 bubble. We have all of the major building blocks for a new era of tech expansion, in which I imagine we will see tech power and control “10x” before it is done. Just like before. 

These are the reasons I think we’re at the beginning of the bubble: 

+ Previous bubbles started around the emergence of a new computing form factor designed for global consumer use. The new form factor meant a new platform for applications. 

In the dot-com bubble (web 1.0), this was the personal computer and the browser. 

In the cloud computing bubble (web 2.0), the form factor was mobile: iPhone, iPad, and other smartphones and tablets, and their operating systems.

The form factor + application platform of THIS bubble (Web 3.0) is virtual reality. Virtual reality (now popularly called the Metaverse) has a new form factor — head gear, camera rigs, haptics, etc. — and with that comes a new platform to be built on. 

For the 50th time: the Metaverse, obviously, hasn’t failed at all. It just hasn’t been released yet. Meta itself bought the basis of its hardware program, Oculus, in 2014. This is a very long term project, we are VERY early in the game, and Meta is far from the only player. Tech giants and startups have, in tandem, for over a decade, been working on bringing virtual reality to life. Every single one of the tech giants has made huge investments in virtual reality and believe me, they are definitely not cancelling all this before it even hits the shelf. 

The current status of the new virtual reality tech, is that all of the tech giants have hardware and software platforms that are ready, or close to ready, to ship; it’s just a matter of time until someone presses play and everyone goes at once. 

This was the type of maneuvering we recently saw with OpenAI, where we have a bunch of players with very serious AI programs coming out rapidly in the wake of an initial launch. What we see now in the market is similar posturing as the giants maneuver and line up around the explosion that is to come. Google, Microsoft, NVIDIA, Samsung, HTC and Apple have been working on their virtual reality hardware and software plays for over a decade, and will hit the track running as soon as the gun goes off. It’s only a matter of time until this shit blows up. 

 I think bubbles are best understood as a time where new foundational changes happen - revolutions in the instruments of production, if you will - and that creates this big shift in the relations of society; therein are the economic opportunities that startups, venture capitalists, and tech elite, violently seize on.

We see tech galloping forward as one team, dragging us behind them. As reasonable of a description of a tech bubble as any is: bubbles happen when a consensus of tech elite has been driven. These companies understand that things are never so simple as having an out and out competition that you someday hope to “win”. Technology has a lot more to do with protracted negotiations between these parties to create and capitalize on market opportunities. (OpenAI itself is a negotiating vehicle to coordinate interested parties in AI and that is also one of the reasons it has been so successful.) 

+ When you have a change in the form factor as well in the robustness of the experience offered by the technology and the possibilities of that technology, you both require and welcome an entirely new world of application development. To succeed, the platforms need to offer a lot of access and a lot of leeway and a lot of diversity in the ecosystem because it needs adoption of applications to drive continued use of the platform. As before, there will be different operating systems that applications will need to build for or that will compete to be the primary operating system. 

In the first bubble, websites were the “apps” of the wide open “frontier” that was made possible by the invention of the browser. Accordingly much of the dot-com economy revolved around building websites and, beneath the application layer, creating infrastructure to generate and host them. 

And of course in web 2.0 we had the rise of mobile apps and I am suggesting that what we see with the Metaverse is going to look a lot like this did where we have a whole new gold rush of virtual reality apps that take advantage of what the new form factor and application platform have to offer. 

+ I think the other thing we see in bubbles and that indicates we are heading into one, is the emergence of new development tools and paradigms that fuel technical productivity for the new application ecosystem. 

In the first bubble you had the development of the MVC framework and website hosting companies and open source, all of which accelerated the productivity of the field and its ability to meet the growing market needs. 

In Web 2.0 we saw the emergence of Amazon Web Services, and almost singularly, but via cloud computing overall, unleashed a new world of technical productivity and the ability to scale platforms and applications globally in a way that allowed you to go to market more quickly and cheaply, with all the results that implies. AWS was rocketfuel for the startup economy, which had new platforms to build for (Android, iPhone) and a global economy to get after that was opened up by these form factors.  

In web 3.0, the major accelerant is artificial intelligence. Most obviously, all of the major IaaS companies are coming out with coding AI that is already reporting 50%+ changes to productivity and an about equal amount of code being generated by the AI; regardless of the exact numbers which are obviously going to be hard to measure at this early date, we are seeing coding AI being used as justification for layoffs already.

This promises a major accelerant of virtual reality application development. 

These tools from Github (Microsoft), Amazon, IBM and OpenAI, are already in the field working to create virtual reality app experiences. 

The acceleration of text-to-image technologies and other “text-to” technologies, backed by AI, are huge boons to all of the entities that need to build out the dynamic, immersive applications of the virtual reality environment. This is the accelerant needed to make this jump together as an industry. 

These tools are ALSO necessary to populate virtual reality with user-generated content, so that end-users can create virtual reality content without needing a big development team or knowing how to code. Especially when you can custom-build those inputs for a given platform, this is tablestakes to engage people in the environment and to collect unique and novel types of production and data from them. AIs will be interfaces that consumers use to communicate and create in virtual reality.

+ Open APIs!!! In my opinion open APIs are definitely bubble-related and we’re seeing a wholeee bunch of new activity around building on top of platforms like OpenAI using these interfaces. 

The hype around open APIs and development that kicked off in the second bubble was extreme. APIs are simply technical interfaces that developers build on, such as the Twitter API which allows them to access Twitter data and thus, for example, display Tweets in their own application. In short, its a way to (supposedly) spread innovation, create platform growth, drive adoption and novel experiences. 

In open APIs as with other selectively utilized accelerants like open source, tech always gets very philosophical and generous when it comes time to put the rocket fuel on something, but as soon as they go from growth stage into whatever sickening devil’s contract comes down the road, the open APIs close and with it lofty ideals about data openness and the commons. 

Open API fever is associated with a groundswell in application development, because VCs make technologies widely and cheaply available, lowering the barrier to entry for development and giving access to otherwise proprietary data and technologies. To whit, OpenAI just announced significantly reduced pricing for the ChatGPT API. 

In Web 2.0, Twitter was the premier case study for open APIs, starting an entire cottage industry of, sometimes even independent, tech startups and companies and apps. This helped propel Twitter into global usage because it was getting all these amazing application experiences built on top of it. As soon as Twitter became established, having bought up or outright stolen features from its ecosystem for years, they fucked over the entire application ecosystem that had been built around the API. This happened across other corporations and platforms trying to claim dominance of the new mobile world. Needing experiences for iPhones, Androids, iPads, smartwatches, lots of them, and quickly, tech opened up early in web 2.0. And then when it was time for consolidation and monopoly, they brought down the ax. Bloom and cull is the family business model.

So after years and years now of not much to do about open APIs, suddenly here is OpenAI bringing everyone into a positive renaissance of open APIs and I think that’s something we will continue to see — APIs for the new LLMs that come out, for all of the new VR platforms, into the data sources that will be exposed for the purposes for having the ecosystem integrate them. Open AIs mean beast mode. 

Open APIs are one of these “levers” that tech elite and VCs are able to pull open and shut and that have a serious and also totally artificial impact on the ecosystem. The tech platforms are trying to get something in exchange and when they have rode that wave into a sale, revenue, an IPO, a closed business model, or whatever it is, the window closes definitively. 

But for now, it’s party time.

In a tech industry without venture capital control, when the industry could be run equitably, the APIs would be open all of the time, not used in some sick cat and mouse game. But here we are. The APIs open again and that is yet one more sign that we bought the ticket and boy are we are about to take the ride. The APIs are going to produce what we often call “1,000 flowers”, but they are grown to be burnt. 

+ The other thing that we have seen associated with bubbles and with growth in the technology sector is a major innovation in payment infrastructure that allows the market to transact on the platforms using a (as much as possible) tech-controlled financial system. The most lucrative place to be is right near the money and that core innovation, might very well be the most important piece of the bubble. 

With web 1.0, that was the age of e-commerce so there was this big focus on just hooking up the financial apparatus to the web through credit card integration and e-commerce financial platforms like PayPal, that have since spawned a lineage of payments platform that now include Affirm and Stripe.  

Web 2.0 was about peer-to-peer payments, so you had your Venmos, CashApp, Square, Apple Pay, Google Pay, Facebook tokens or whatever the fuck they had, and that provided for a lot of growth capture and a lot of profit and a lot of adoption for the tech companies. It was about getting a big install base of tech-owned financial products into the mobile internet and broadening the base of the financial products that tech had on offer.  

 Now for Web 3.0 we have a new financial infrastructure to bootstrap off of, and that is the crypto universe. 

While crypto was absolutely in the works in fact, ever since the 90s, the ecosystem has been built out significantly by venture capitalists in the past 10 years and the thing is pretty much hardened for scale. “Scale” is another big theme of bubbles. During the “crypto winter” a huge amount of integration into the traditional financial system was accomplished, with major deals, partnerships, integrations, investments made with massive players like Wells Fargo, Blackrock, Chase, Goldman Sacks, JP Morgan Chase and others. The many crypto startups that have been started since web 2.0 are finally maturing, and the coming virtual reality platforms and the applications that come on top of them, will be developed natively with crypto built-in. 

The virtual reality age will be the #1 thing that is going to drive crypto adoption both by consumers and by the enterprise, by governments and militaries, by cities, by investors and financial companies, because it will be what we call a “first class citizen” of the Metaverse and will be presented equal to traditional payment options, if not even ahead of them. This is just going to be part of our much-expanded “digital lives” and this is, in fact, the real reason that the Metaverse is happening. 

In my mind, technology is truly about the effort to wrest the financial system from the traditional capitalist establishment and into fascist venture capitalist control. In some ways, all the technology and the apps and the headsets are just another thing to thread the new financial infrastructure into and a platform for financial dominance. The financial innovations ensure that the money is happening through tech, the money for the platforms and the apps and the startups and the products is going through the tech system itself. We are, as in the previous bubbles, armed with a new, extremely extensible set of financial products that is going to go 10 when all of this starts rolling out.  

+ The last factor I’ll focus on here is that what defined previous bubbles perhaps more than anything is the level of data capture that was enabled. 

The dot-com bubble obviously saw the very first internet-mediated data collection, and that collection became the basis of the next bubble, web 2.0, where big data from the explosion of social and mobile caused yet another massive expansion of data capture. 

The one thing that DOES stay consistent is technology’s collection of data. Web 2.0 built on dot-com data just as AI now is built on all of the data collection that has been done prior.

One of things that absolutely *made* the Web 2.0 bubble was that the form factor and new platforms (mobile, social) created a massive increase in the amount of data that had previously been harvested from browsers and desktop applications during the previous era. This fueled AWS, it fueled the payment platforms, it fueled the big data build-out which is the basis of the AI we see now. 

The reasons for these increases in data are not esoteric. In the dot-com, you had your desktop and your websites. When we moved into the iPhone era and the mobile/social era, and when people were now on the internet 24/7 and addicted to these devices, the data increased as the amount of time increased and the surfaces for data collection expanded.

We’re in the same situation now where there is about to be another oil rush of data. Virtual reality entails spending even yet more time in these tech habitats, more of your life happening on it, and it significantly increases data capture because it gives tech more access points in the human life. They want this to be the primary “location” of health care and schools. Virtual reality has physical motion in a way previous platforms haven’t, it has immersiveness that other previous platforms haven’t, it has features like haptics and hand controllers and eye motion detectors, it has motion capture technology and advanced video and audio tech for all of these new feedback loops. So between the expansion of human access and the expansion of the reach into that human and what you can get out of them in terms of data, tech is set up to get just a massive order of magnitude increase into the amount of data it has. 

An orders-of-magnitude increase of data is definitely bubble material.

+ I’m also seeing some major socioeconomic factors that have contributed to past bubbles and that we are seeing playing a major role today, in enabling the web 3.0 bubble to emerge. 

One is that, just like they were in 2009 when the cloud computing bubble really started to kick off, venture capitalists are sitting on a record amount of dry powder… that is, cash they have available to move into the market by investing in startups. They are currently sitting on over $300 billion that they let build up. When they deploy that into a market (that is currently depressed due to VC fixing), we will see the money come out and a whole bunch of new startups being started and mid and later stage companies developing serious revenue, down the road the IPOs and exits will start again. Basically, VCs are sitting on this cash like it was cocaine and they’re about to pass out silver spoons to the entire startup ecosystem.

Bubble!! 

Also worth noting that the cloud computing bubble came in the middle of a housing crisis. To that point, tech’s interactions with cities during bubbles must be examined. The dot-com bubble saw tech and VC take over the Peninsula in the Bay Area as the tech money and activity allowed them to gain the upper hand over residents and start displacing and gentrifying them and pushing them into low-paid jobs working for tech campuses. It was during web 2.0 that tech began its serious invasion of San Francisco.

Bubbles have always involved tech acting as a geopolitical force and particularly on cities themselves, where cities become a source of raw material for the tech economy and the “host” for the bubble. Right now, tech is perched in Miami and Atlanta, with venture capitalists trying to brow-beat the industry into moving to these new “tech cities”. Venture capital has exhausted its resource capture from the Bay Area or at least has it under control (lol), and is now scaling outwards. As it enters and works to establish dominance in these new areas, that is also going to provide a significant amount of financial activity and congress that will feed this bubble, house its workers and provide its cheap labor. 

+ To sum:

The bubble has a fuck ton going for it. The crypto winter is behind us (they fixed that too), and everything is lined up very close to what we’ve seen in previous bubbles. All the ingredients are here for another cycle. I know that everyone is saying that the Metaverse is dead and crypto is dead and blah blah blah… they don’t know what they are talking about and you shouldn’t listen to anyone who is saying these things. There are real, observable events happening in tech and we can understand them through genuine and material observation. 

It didn’t end last year. It wasn’t even born then.

So let me be the first to welcome you to the REAL web 3.0 bubble.