(2018-10-01) USV: The Myth Of The Infrastructure Phase

Dani Grant and Nick Grossman of Union Square Ventures: The Myth of The Infrastructure Phase: Our hypothesis is that this is not actually how things play out. We are not in an infrastructure phase, but rather in another turn of the apps-infrastructure cycle. And in fact, the history of new technologies shows that apps (KillerApp) beget infrastructure, not the other way around.

The same pattern follows with the internet. We start with the first apps: messaging (1970) and email (1972), which then inspire infrastructure that makes it easier to have broad consumer adoption of messaging and email: Ethernet (1973), TCP/IP (1973), and Internet Service Providers (1974).

This cycle also correctly explains the sequence of events in Web 3.0. We start with the first breakout app: Bitcoin (2008). This inspires new infrastructure like Ethereum Smart Contracts (2015) that makes it easy to build new apps, and infrastructure like Coinbase (2012) and Metamask (2016) that enable consumer adoption of these new apps

We’re now waiting for the next big apps that will help guide the next wave of infrastructure.

The common theme in the development of each major platform (electricity, cars, planes, the web, mobile, etc.) is that we build what we can given the tools available to us at the moment. In Where Good Ideas Come From, Steven Johnson refers to this as The Adjacent Possible.

Each time the apps => infrastructure cycle repeats, new apps are made possible because of the infrastructure that was built in the cycles before. For example, YouTube could be built in 2005 but not in 1995 because YouTube only makes sense after the deployment of infrastructure like broadband in the early 2000’s

Development Frameworks Versus Investing Frameworks

Take light bulbs for example. Yes, they were invented before the grid, but looking at it from an investor perspective, no one sold a lot of lightbulbs until the grid was in place.

It will be a challenge to build cryptocurrency infrastructure now until there is a breakout crypto app that other developers want to emulate and need better dev tools and infrastructure to do so.