Variant Fund cofounder Li Jin came to speak to Crypto, Culture and Society about labor and work on the Internet.
Li Jin is the most polymathic of VCs; the kind that, alongside investing, founded a platform economy job site, ran a cohort-based course for founders building in the creator economy, taught social media celebrities how to angel invest, dropped surprise NFT sales that led to a New York Times feature, shares her prolific thinking through Twitter threads, her newsletter, her podcast Means of Creation, and writes for publications like The Economist and Harvard Business Review.
Consistently, she’s identified and catalyzed new waves of innovation, from coining “passion economy” while at Andreessen Horowitz, to joining forces with Variant to push forward the ownership economy: the idea that future winning internet platforms are going to be owned and operated by their users.
So how does this intersect with work and labor?
It’s becoming clear that labor is evolving. Few jobs are for life or strictly 9-5. And, for folks in jobs defined as part of the gig economy, like delivery drivers, it’s more common to report to an app or an algorithm than a manager.
The creator economy is the more optimistic framing of the future of work -- one that is more aspirational and creative. In this economy, Web2 social networks are critical pieces of infrastructure -- the toolkit creators use to monetise.
It’s tempting to think of the creator and gig economies as quite distinct. On-demand marketplaces commoditize the worker, whereas the creator economy emphasizes uniqueness. One is perceived as “work” while the other as more of a hobby or luxury. The creator economy emphasizes direct interaction and loyalty between the creator and their fans, and there’s a deliberate distance between delivery app users and the drivers that serve them.
But today, creators are as beholden to Web2 platforms as gig workers, and creators compete against each other for attention the way drivers compete for a given ride.
There’s limited ability for creators to be able to communicate with fans or followers on their own terms. As data is captured by Big Tech, only a handful of apps and platforms matter. Creators are burning out and live in a state of precarity.
There’s an imbalance of power between centralized platforms and their users.
And it’s now clear that platform-based work which seems creative and aspirational is actually a kind of 21st century serfdom where one’s labor makes someone else rich.
Historically, at moments of tension like these, workers would form unions to negotiate with their employers but, without a clear point of contact, that’s unfeasible. Workers and creators can’t negotiate with an algorithm. So workers are experimenting with bottom-up tactics. These include union-like behaviour through which non-employees can coordinate and submit demands, algoactivism like Doordash’s #DeclineNow, third party products where workers share knowledge like FYPM, or mutual-aid style behaviour such as Instagram pods where influencers bond together to ensure visibility. Sometimes the platforms shift their behaviour, sometimes they don’t. Typically, these efforts lack the scale to make themselves truly heard.
A better solution is for workers to exit these systems they have no control in, and for creators to become owners by building new means of distribution and production.
This not only gives time for regulation to evolve but, in setting up platform cooperatives or DAOs, workers themselves control their future rather than being beholden to corporations.
Li: I’ve grappled with my role a lot. When I was in traditional VC, I thought, the world is better for workers with these platforms than not. But, ultimately, for the platform to be worth a high valuation, there had to be some level of extraction. I was a user of these platforms, too, and kept asking myself; do they deserve their cut? How was the level of that cut determined? There was a fundamental tension between being creator-friendly versus trying to capture value from creators.
That internal debate has been quelled as I moved into web3 investing. The labor versus capital dynamic that people often refer to when they criticise me as a VC is a very deprecated understanding of the nature of both, reflective of a world where capitalists owned factories or a small number of platforms had powerful, siloed network effects. But that dichotomy doesn’t hold when the users or the community of a product own and govern the capital as well; this brings us into a new paradigm where it’s not labor vs. capital but labor and capital.
Bhaumik Patel: People talk about DAOs as “group chat with bank accounts & everyone votes on how they spend it”. But most DAOs live on a spectrum; what concrete activities do you view as DAO-like?
Li: The core concept of DAOs is the shared cap table, the idea that everyone in the DAO is an owner via the native token. This token gives them economic and governance rights, akin to a digital cooperative where every member is an owner of the community.
Bhaumik Patel: Another criticism is that, even if DAOs have collective ownership as a concept, it doesn’t mean decision making factors in the majority input. Some of that’s because, just like voting in real life, DAO members don’t always vote on governance decisions. Is it a problem if only a few folks vote? Does it actually matter?
Li: It’s so early, and the way it’s functioning in reality is far off the ideal state. We’re going to see experimentation to ensure new models of governance, democratic versus plutocratic governance, and ensure that smaller shareholders are accounted for.
Graeme Boy: Are there models you’ve seen besides tokens that have effectively distributed ownership?
Li: Not everyone needs to do a token; for some businesses, there are value-add intermediates you don’t want to remove, so equity makes sense. AirBnB created a host advisory board pre-IPO who acts as the voice of the host and convenes with the leadership team to represent the platform stakeholders versus shareholders. Other startups use advisory equity creatively; the SEC rules are you can have a maximum of 2,000 people on your cap table so I’ve seen advisory agreements used at scale to give ownership to the community.
Jasmine Sun: Some of the criticism we’re seeing comes from the sense that web3 folks are using the rhetoric of unions without the literacy to truly engage. Have you seen proactive efforts from web3 folks to more meaningfully learn from, resource and support worker power efforts not currently in web3?
Li: A criticism I heard was the idea that DAOs would replace unions, which was not at all what I was trying to communicate. This is a new structure that could potentially help accomplish some of the goals we have around worker empowerment. In a world where work structures are evolving (to platforms), we have to evolve the toolkit to push for various goals. David Phelp’s thread described it well; economic trauma is centuries old; there’s been so much exploitation of workers by the capital class that it’s hard to see that capital can be a tool rather than a source of oppression.
Erik Forman: At the Driver’s Coop [my company] we have a wide conversation internally about how to use different tools; I’m technologically agnostic. We know what our North Star is -- helping workers retain more of the wealth they create in opposition to the current capture of wealth. DAOs are a new thing. The question is; can people who want to wage class struggle work together wit those who have capital? What I get excited about is someone coming from the perspective of capital who wants to advance equity and use new tech in creative ways. Technology alone isn’t enough; no technology is. It’s going to require creative application.
Graeme Boy: My sense is that we’re so early in DAOs. If you think about 20th century companies, it’s 150,000 people working to build a camera and selling it to people. In the 21st century, it’s 12 people in a room making Instagram where the value is coming from the network; a whole different structure. What are the companies you see that look like the step beyond that?
Li: Part of the reason I’m spending time outside of Ethereum is there are barriers to accessibility for the mainstream audience. We need to consider ecosystems where builders are prioritising high schoolers without $100 to spend on gas fees. In terms of companies who do this well, it’s so early. A couple of years ago, the idea of progressive decentralisation was unknown; now, it’s the norm to distribute a token to the community.
Liam Herbst: Can decentralised platforms ever offer the same creator discovery as web2?
Li: The superpower of web3 currently is monetization, which is inherently downstream of discovery; web3 is focused on the bottom of the funnel of the creator journey. But even Metamask only has 10 million users so it’s difficult for a crypto native product to do meaningful discovery at that scale. For now, web2 and web3 will exist in tandem and creators will leverage the best tool for the job. Historically, the reason there has been no middle class of creators is that the monetization model of web2 (advertising) favors scale and reach; the monetization options now are more vast which helps to mitigate that.
Li: Totally. Web2 monetises attention, web3 monetises passion. That’s really the heart of it. Many creators attract passionate followings but don’t command scaled attention; that shift from rewarding one from the other is extremely momentous.
Vyara Ndejuru : How do you define passion?
Li: Passion is a degree of emotional attachment to the creator that borders on love. Historically, this attachment has been under-monetized in web2 as you can’t “super like” something--every like is a fungible like without monetary value and there’s no way to express this passion. One person’s like was the same as the next. In web3, scarcity enables price discrimination, and the ability to translate passion into monetization.
David Zelnicker: You have to get people’s attention to sell them on passion. Even if web3 monetises better, aren’t we always going to have to think about top of the funnel?
Li: I think you can decouple attention and passion. The musician Daniel Allan, who I just spoke to before this session, recently did a crowdfund on Mirror and raised 50 ETH ($142K) to fund his EP. At the time of the crowdfund, he only had about 200 Twitter followers. There’s a disconnect between how many followers he has and how much they love him. And there are entire categories of content creation where this disconnect is the case, such as writing or dance. The creative fields, by definition, have this phenomenon, and web3 presents an opportunity for new models that enable creators to monetize much more effectively.