I have heard from some of you that you don't like it when I write about crypto and NFTs. This personal blog is supposed to be largely about city building after all. So today I thought I would write about crypto and NFTs. More specifically, this podcast episode, which I watched last night.
It's with Marc Andreessen and Chris Dixon of the venture firm a16z, and it's actually less about specific things like NFTs and more about the reinvention of the internet in general. Why I found it particularly interesting is that Marc co-invented the first widely-used web browser. Anyone remember Netscape?
So he was around for what we are now calling web 1 and he is around for what we are today calling web 3. And there are lots of parallels between then and now. Similar to today with crypto, the early internet had lots of critics and lots of people who thought it was dumb and that it would never amount to much.
Oops.
Here are a few other thoughts and ideas from the podcast that I found interesting (some of them even relate to city building):
No matter how many times we have seen the same movie, humanity seems doomed to repeat the same mistakes when it comes to, among other things, embracing new ideas and innovations. I agree with Marc in that part of this is generational. Younger people are often more open to new ideas because they view it as a way for them to establish themselves and make their mark on the world. Whereas older people (established people) often view new ideas and change as a threat to their current position in the world.
Marc drops a number of books throughout the talk and one of them is The Mystery of Capital -- Why Capitalism Succeeds in the West and Fails Everywhere Else. This is a well known book by Hernando De Soto and the big idea is that property ownership and property rights are really the fundamental ingredients in our modern world. People need to know that if they hold title and invest money into something, it's not just going to get taken away by someone. And it is this underlying legal structure that has allowed people to leverage property into wealth.
This is a fascinating observation in its own right, but it also relates to crypto. Hear me out. Chris Dixon makes the argument in the episode that web1 democratized information (anyone can search for stuff), and that web2 democratized publishing (anyone can share stuff through platforms like Twitter or the blogging platform I'm writing on right now). He then goes on to argue that the promise of web3 and crypto is really to democratize ownership of the internet. Anyone can buy crypto tokens.
Why might this be a big deal? Well if property rights in our offline world are a fundamental ingredient to modern society, it seems logical to me that property rights in our digital world(s) might also be equally transformative. And this is precisely one of the things that blockchain technologies enable for the very first time.
Finally, on a mostly unrelated note, I liked Marc's comparison of happiness vs. satisfaction in life. Happiness, he explains, is like getting an ice cream cone on a hot summer day. The first and second feel great, but after that you move on. Satisfaction on the other hand is enduring. It's the feeling you get from working on something really challenging and then finally succeeding. And that's exactly how I feel about real estate development. There are lots of shitty days and lots of grinding. But in the end, I do feel very satisfied.
Toronto's Bata Shoe Museum has an exhibition on right now that is all about sneakers. It's called Future Now: Virtual Sneakers to Cutting-Edge Kicks. I haven't been to it yet, but it's on the list. Because this is interesting to me for a few reasons.
One, shoes are important and, as a general rule, I always wear them when I leave the house. Though there may have been some exceptions to this general rule.
Two, sneakers are high fashion. Just look at everyone walking around Paris.
And three, sneakers are such a great example of a clothing device that went from utility (we need to protect our feet) to fashion (we all have a desire to express our unique identities) to art collectible (yes, lots of people buy shoes that they never actually wear).
So if you're looking at stuff like NFTs and digital fashion and scratching your head as to why they have any value, sneakers are probably a good place to look to help you understand why many of us seem to have a need to collect things that help us define our sense of self.
This is, of course, one of the reasons why Nike bought a digital shoe company.
I suspect that the exhibition will be at least partially about this and at least partially about really cool 3D-printed shoes.
The global luxury goods market is somewhere around US$300 billion if you exclude fancy cars. And in just 4 years, global luxury spending has flipped from over 60% of it being in Europe and the Americas, to now over 60% of it being in Asia -- with over 40% of it being in mainland China alone. See above chart from the Financial Times.
But I think what really happened is that when global travel shutdown in 2020, Chinese buyers just started spending all of their luxury goods money at home instead of flying to Paris for the week. Because if you look at Chinese luxury goods spending in 2018, somewhere around 1/4 of it was done in mainland China, whereas today it's close to 100%.
So the Chinese have been moving this market for quite sometime. But now that the consumption has moved entirely home, what does that mean for cities around the world? Hong Kong used to be one of the most important places for luxury consumption in Asia (no sales tax), but that has changed and it probably won't return. This is for reasons that go far beyond luxury goods.
But I think we'll see spending in Europe bounce back along with Asian travel. Because buying a luxury good is about much more than just the good itself. It's about the experience. It's about how it makes you feel when you buy it. And it's about signalling to others who you are as an individual. This may sound vacuous, but we all do it, with or without expensive luxury goods.
There are also new opportunities emerging by way of NFTs. I am sure that some brands are already doing this, but if I were in charge, I would issue a unique NFT with each luxury goods purchase that records, among other things, where it was purchased. Is a bag purchased on the Champs-Élysées worth more if there is a record of it that is etched in stone permanently? Maybe.