Owner’s Remorse

This article first appeared at Strange Matters, a registered worker cooperative.

Blockchain elites believe everyone deserves a stake in the internet. If Web3 becomes reality, will we all be equal stakeholders?

Did you hear the one about the Marxist venture capitalist?

She spoke in the language of economic justice and worker empowerment to market the companies in her portfolio as more equitable alternatives to unions and cooperatives. That might sound like a bad joke, but this “Marxist VC” – whose personal brand challenges the leftist truism that elite capture solely co-opts identity politics and ignores class issues – indeed exists.

Li Jin is the public face of the investment firm Variant Fund, which she co-founded with a former Andreessen Horowitz colleague of hers named Jesse Walden. Jin tweets and podcasts about how she wants to fix the web. She locates her solutions in the Web3 technologies of blockchain and cryptocurrency. The era of Web3, ostensibly, will defeat Big Tech and uplift internet users with decentralized data storage and open source software; its most ardent supporters argue this era is simultaneously on the horizon and already here.

Though far from the richest in its field, Variant has become a bellwether for how the investors of tomorrow will talk. The firm is building an “Ownership Economy” in order to put into praxis “A Theory of Justice for Web3”. The rhetoric is less suggestive of inescapable technological progress than it is of broad-based economic progress, something that’s supposed to contradict the incentives of Silicon Valley.

But this is rhetoric – and rhetoric alone – for a reason. Jin and her fellow investfluencers at Variant are setting an industry standard. They’re demonstrating how VC firms might win over consumers and dominate the internet in the years to come. Already, Variant has won over techno-optimists on the left. When Jin tweets that Web3 can help all of us to “harness the power of collective action” and “ensure labor’s voice is represented” more effectively than traditional collective bargaining, it sounds like she’s describing a socialized internet, which could make you wonder whether the left has gotten crypto, the blockchain, and its most vocal proponents all wrong.

Should it come to fruition, Variant’s version of the internet will indeed be socialized, though just for the rich. It will be rugged individualism for everyone else. Behind their labor movement language – reminiscent of the “democratization” praise that surrounded the burgeoning platform economy over a decade ago – the firm is hawking tried-and-true shareholder capitalism with cryptocurrencies instead of stock options. I saw the techno-lefties around me fall for their charade. Here’s how it happened.

Why Blockchain Socialism?

The internet is valuable because all of us are on it all the time, but ownership and control remain largely in the hands of private investors. The free internet has shrunk with each passing year as more and more infrastructure continues to fall under the control of giant capitalist firms obsessed with monetizing users for their own profit. If successful startups don’t become monopolies themselves, they will probably be bought out by an existing one. Centralization intensifies as platforms grow more sophisticated in their abilities to surveil and extract, and more of ourselves can be seen and sold to data brokers. The suffocating reality of Web2 makes reform seem impossible; it almost seems better to start from scratch.

This became the agenda for a specific niche of technologically inclined leftists. We might call them blockchain socialists¹ – and I was one of them. We were left-leaning, cautiously optimistic technologists who often struggled to remain cautious, placing our hopes for the future of a free and open internet in the world of blockchain and cryptocurrencies. Many people in this space, even if they had never identified as socialist or anything similar before, were motivated by the potential to replace Big Tech privatization and centralization with a decentralized internet. But given all the bubbles and crashes over the past decade, the recent scandals of Sam Bankman-Fried, and the rightful discrediting of many other tokenomic schemes in the eyes of the public,² it makes sense to wonder how a blockchain socialist persuasion managed to pass muster.

My foray into trying to understand Web3 began in the spring of 2021. Many of the other enthusiasts I’ve since met IRL and through social media got involved around then, too. As the restrictions of quarantine forced our digital lives to double as our entire lives, fighting for a more decentralized internet felt like a meaningful step toward fighting for a more egalitarian world post-COVID. The prospect of decentralized ownership sounded like a form of social welfare and universal benefits for all internet users; it felt like an intellectual cop-out to dismiss Web3 wholesale. There’s no reason a universally owned internet shouldn’t be a big-ticket agenda item for the working class.

However, there can be no doubt that this dream of a socialist Web3 has been thwarted by textbook capitalist actors, the savviest of which include the investfluencers at Variant. They swooped in and used a variety of schemes to gain hegemonic control of all new and consequential crypto projects, presenting the outcomes as “communal” and “cooperative” and “progressive.” This is the deeper reason that crypto has been scandalous.

So what actually is this new technology that VCs want to control? In essence, blockchains are programmed to compensate users who help to secure encrypted data with integrity. Because this participatory form of data storage takes place across multiple locations by design, that makes it decentralized, which in turn impedes hackers. When there have been crypto hacks, they have typically been on networks that aren’t sufficiently decentralized.

Thus far, the implementation of Web3 technologies has mostly been limited to recording crypto transactions. My curiosity about the blockchain is more theoretical, as I’ve been more interested in what it could do than what it currently does. If the economic speculation surrounding the blockchain is minimized, it could be useful to something called platform cooperativism. Platform co-ops, which are tech start-ups predicated on democratic user ownership, had been inspired by the resilience of brick-and-mortar cooperatives amid times of crisis like the Great Recession and later during the pandemic, when worker-owners voted to keep their businesses afloat through taking voluntary pay cuts or self-furloughing. Then, as now, I believed platform co-ops offer our best chance at building up a solidarity economy at scale.³ I thought it was worth exploring whether the blockchain could boost this effort.

Decentralized, cooperative data security – including the digital tools it had enabled – seemed like a natural fit with cooperative business ownership. I soon realized this pairing was more far-fetched than I had thought.

Cooperation or Subjection (or Both)

Over the time that I’ve been researching and writing about potential use cases for Web3 in cooperative ownership and direct democracy, I have encountered Li Jin’s public writing and podcasting, often concerned with the same general ideas as I am, and have been freaked out by how she doesn’t sound like any other venture capitalist out there.

What’s annoying is that Web3 proponents like Jin actually have a more cogent analysis of what’s wrong with the internet than most leftists do. She hones in on the question of ownership in a 2021 essay: “As more of our time spent and work opportunities become mediated by online platforms, giving ownership of these platforms – in terms of value, content, and data – to their participants becomes a powerful vector for facilitating social and economic empowerment.”⁴ She sells an attractive idea, and it’s hard to disagree. Later in that same piece: “The future of consumer software is crypto, centered around the belief that what users create and the value they engender belongs [sic] to them.”

Web3 venture capitalists such as those at Variant don’t sound like the rest of the tech investor class – they claim to want to enrich everyday people. This is one of the most intriguing ways that Silicon Valley has ever been disingenuous. I was less certain of this when I first learned about the tech they were evangelizing. On a rudimentary level, I understood that blockchain was designed to be a counterpoint to Big Tech. Who was I to say that Variant couldn’t then be a counterpoint to the tech investors of yore?

During the 2021 bull market, I regularly encountered Jin and Walden’s tweets insisting that blockchain and crypto were, rather than theoretical, on the brink of materializing a user-owned internet. In thread after thread, they sermonized that two trendy phenomena were going to upend the status quo: non-fungible tokens (NFTs) and decentralized autonomous organizations (DAOs).

The tools demonstrate advantages of the blockchain itself. An NFT can certify that its owner has access to something – it could be a ticket to a concert, membership in a club – and the security of the blockchain affirms the certificate is undeniable. A DAO is any kind of organization that has its own unique cryptocurrency; where an organization is a group of people who do stuff for a stated purpose, a DAO is simply when that “stuff” incorporates crypto. Here, the function of crypto is that it can be dispersed internationally and instantaneously, compared to traditional government-backed currencies.

Speculation has largely been to blame for making these tools seem shady – though you won’t hear it from firms like Variant, as speculation is paramount to their whole business operation. Opportunists who want to be the next Beeple churn out visual NFTs that feature shiba inus, red laser beam eyes, caricatures of Ethereum founder Vitalik Buterin, and other memetic signifiers of Web3 in the hope that a well-versed, well-off anon will snatch up their work. DAO founders cultivate a similar kind of lazy self-referentiality, minting cryptocurrencies that prospective members are required to purchase in order to enter a private Discord server where they’ll mostly find chatter about how to attract more members to the DAO in question. Which I guess is a more drawn-out way of saying “pyramid scheme.”

Still, I wanted to see whether this new technology could be used to grow the projects I really cared about: platform cooperatives seeking to place internet infrastructure directly under worker control.

In 2021, I was volunteering for one such platform co-op that had been around since 2018, called Ampled. It was like Patreon for musicians, but the main draw was that it was collectively owned and managed by its volunteer workers, musician-users, and subscribers.⁵ I inherited my attitude towards Web3 from Ampled co-founder Austin Robey, who was doing his own research⁶ at the same time I was doing mine. Robey began publishing articles on why he believed the blockchain was instrumental to cooperativism and vice versa, even putting into practice some of what he was advocating.

This included a special NFT drop to raise funds for Ampled, in large part to help compensate contributors such as myself who had been putting in sweat equity. Anyone who purchased one of the NFTs automatically became a lifetime community member (in place of paying the $3 monthly minimum required for that membership class), and their NFT ownership was encoded into the transparent, immutable ledger of the Ethereum blockchain, making their stake in Ampled irrefutable.

“[C]rypto, as a technology that may shape arts economies, is not going away,” Robey wrote in a blog post⁷ announcing the NFT drop. “So today, we can work to understand this technology, explore early adoption and proactively help to shape it, or be subjected to it and have to deal with it later.”

Squad Poverty

Between those two paths, subjection has won out. I saw blockchain socialists look past the similarities between the Variant types and their forebears who emboldened Web2 in the first place, in the hope that the technical distinctions of Web3 would be insurmountable enough to disempower even the skeeviest venture capitalist. To maintain rapport with VCs and CEOs (typically those who bloviate about “regenerative finance”), blockchain socialists have treated policies like wealth redistribution and social safety nets more like vague affinities – things that could be loosely agreed upon, if at all, without getting too specific about their implementations within society – than defining qualities and necessary tenets of decentralization.

I think the purpose of their reticence has been to carefully break ideological ground in the startup sector, where anything political tends to be either disregarded or libertarian. Curbing dogmatism and factionalism certainly can help to broaden coalitions. But in this case, by ideologically coddling the upper echelons, they haven’t built a big tent – they’ve expedited elite capture.⁸

Robey’s engagement with Variant has always been polite in this regard. He has constructively critiqued them, which means he has taken them seriously. In one essay, he describes Variant’s core concept, the Ownership Economy, as “an important idea” that “outlines a promising movement to bring more power to users and help communities capture more of the value they generate,” though “there is a risk that the word ‘ownership’ may be misleading.”⁹ This supposed risk, I later realized, is not an oversight.

In his original essay introducing the Ownership Economy to the cryptoverse, Variant co-founder Jesse Walden has much to say about rewarding users for the value they create for platforms, all without using the word “democratic” once. He refers to his own idea as a “more cooperative economic model” rather than a completely cooperative one. As for his firm’s role in fostering the Ownership Economy, Walden writes that his hope is “to work with this generation’s Daniel Eks.”¹⁰ That should disabuse anyone of the notion that the investment firm intends to make the internet fair and just. It should especially worry people like Robey who know that the CEO of Spotify has more or less impoverished every single working musician.

The gist of the Ownership Economy is that all startups should become publicly traded companies that distribute stock in the form of crypto, which can be purchased on an exchange like Coinbase or Uniswap, as well as awarded to the startups’ dedicated users, much like unlocking achievements in a video game. It’s an agenda for turning startups into DAOs and, in turn, flattening DAOs so that they’re indistinguishable from startups. It supposedly resolves the limitations of platform cooperativism, as Jin explains on an episode of her podcast:

Platform cooperatives need to overcome this issue of being disadvantaged in terms of the ability to accrue capital to themselves and to be able to invest in their growth in order to really become competitive with centralized businesses. To me that’s why DAOs are really exciting because DAOs resemble cooperatives in terms of being owned by their members or workers and people who are contributing to the network, but they’re also able to benefit from speculation on their native DAO token, which allows them to grow and amass a really large treasury that can be used to fund all sorts of different initiatives.¹¹

This assessment hides more than it reveals, so let me read between the lines. For platforms and applications under the Ownership Economy, the connection to cooperatives is meant to be aesthetic (resembling a co-op) rather than legal (being a co-op). That way, Variant and their ilk can get their outsized shareholder power in new businesses which they would describe with grating c-word alliterations – something to the effect of crypto communities and collectives controlled by creators, consumers, and contributors.

Walden and Jin recognize the internet has broadened the definition of labor – whenever we interact with an internet platform, that “work” ultimately drives its market value – but their outlook on compensating user participation accordingly is far less ambitious. That’s on purpose, as their outlook still preserves not only the existence but the sovereignty of venture capital. Earning some crypto shares and corresponding governance power for using, say, a blockchain version of Twitter on a daily basis would be nice, in a similar vein to how Uber drivers getting meagerly paid to give rides is nice. As in, it’s better than not getting paid at all.

Under the Ownership Economy, VCs and any other whales who can buy up large quantities of tokenized equity – voting is token-weighted by default – will by definition have the loudest voice in legislating company policy and will stand to rake in exorbitantly more dividends than users. All of this renders ownership a superfluous category. There’s no point to being considered an owner when, for the majority of users, the crumbs of paltry, gamified compensation would constitute the extent of their ownership. Feeling like an owner is a different matter. The long-term intent of Li Jin and her investfluencer squad is to condition smaller token holders to forget about their buyer’s remorse and “disproportionately value the thing they own” through the tactic of “building psychological attachment,” as she admits quite enthusiastically in the Harvard Business Review.¹²

My fellow techno-lefties have been far from immune to the crypto hype machine. Robey, the Ampled co-founder and de facto CEO, has done his part to legitimize Variant as a touchpoint within the blockchain socialist discourse. He’s not alone. In an op-ed for The Nation, Daisy Alioto, a founding member of the Freelance Solidarity Project and a co-founder of the NFT-funded publication Dirt, contends with Jin’s belief that DAOs “represent the next step forward in the labor movement.” In reference to the Twitter thread this quote comes from, in which the Variant co-founder frames unions as innately corrupt, bureaucratic, and racist, Alioto concludes, “I think Jin was wrong about unions: If you are working in the digital economy, you should still organize your workplace – but you should also join a DAO.”¹³ This might be the gentlest pushback against a union-bashing business investor to ever appear in The Nation.

Balanced, constructive criticism – that Jin’s argument is somewhat flawed yet her insight around Web3 is worth taking into consideration – again takes the place of trying to ascertain deeper intent. That is, interrogating why Jin chooses to dismiss unions at all, and for Robey, why Walden chooses to frame ownership as such a laissez faire category. The answers to each are the same: If and when the next phase of the internet arrives, Variant thinks that shareholders like themselves should still call the shots. Once again, the digital masses will have been set up to be powerless.

As for Alioto’s recommendation, I don’t think it’s worth investing the effort to join a DAO – not if you’re looking for more solidarity in your life. I freelanced at one DAO for a month when I was in between jobs, and it was fine. In the form of its governance token, I was paid the equivalent of $40 an hour to be available on Discord to complete social media management and copywriting tasks. Ever since the bear market that followed the spring of 2021, this DAO and many others like it had charted a similar path towards professionalization. VCs started to subsidize these orgs based on whether their Discord servers had decent user base size and commitment, but they pushed the DAOs to focus more on branding and marketing through paying users to perform these tasks. Put another way, I found myself gigging at a majority-freelancer startup. The compensation was only adequate thanks to the capital from Silicon Valley – nothing to do with any complex market finesse of tokenomics.

Join a DAO if you want a glimpse of what employment under the digital economy might look like in the near future (aside from Discord becoming the next Slack). You might find, as I did, that it’s easier to imagine the DAO-ification of Big Tech than to imagine its downfall. Consider this hypothetical: Facebook already tried launching its own digital currency once before. Should they try again, DAOs have demonstrated all the best practices for how the social media giant can build deeper psychological attachment with users. Sporadic token airdrops, voting opportunities (“Should FacebookDAO make a Telegram or Signal?” “Who should headline the inaugural FB Fest in Idyllwild?”), and calls to “contribute” to open source tools won’t disrupt their business model, aside from giving Facebook an excuse to call it a decentralized ownership model.

All the praise around user ownership in this sector feels like a rhetorical throwback, serving a similar purpose to Ronald Reagan’s support for policies that incentivized employee stock ownership plans. Reagan’s weakening of labor laws and strengthening of the corporate state were more palatable to full-time professionals who, less affected by the diminishing resources of unions and New Deal-era initiatives, now felt pride and security from having a financial stake in their employers. At least those workers had benefits and received stock on top of a base salary. There won’t be anything for today’s freelance class to collectively own and control in Web3 so long as they need to keep cashing out their remitted governance tokens in order to cover rent, health insurance, and other basic living expenses.

The Job of VCs

While they’re not responsible for literally turning crypto startups into hordes of freelancers, Variant has popularized the current rhetoric of economic justice, appropriated from unions and platform co-ops yet simultaneously dismissive of the two. Across the cryptoverse, they attempt to spin this all-too-familiar speculative frenzy as promising, if not outright liberatory. To sum up the direction DAOs are heading, picture the gig economy if it was rebranded as collectivist: Being your own boss is out; now you and your peers can be your own squad!

During my stint volunteering for Ampled, Austin Robey introduced me to the areas of compatibility between the blockchain and cooperative ownership on the net. I give him that credit. I also think his optimism towards Web3 is premature. I’ve been frustrated by his attitude given his years working in the platform cooperative space, itself a reaction against venture capital plutocracy. As he writes in Dirt, Daisy Alioto’s publication:

Venture capitalists in Web3, whose job it is to recognize emerging trends and patterns before they are obvious, are increasingly evangelizing collective ownership of online infrastructure or appropriating and repurposing Marxist ideas. This may be as good of an indicator as any for what’s to come: a growing sentiment and support for leftist products, policies, and organization in tech. The result of this shift is an opportunity for the left to bend Web3 culture to be closer towards the ideological left […]¹⁴

Unfortunately, the fate of Ampled pokes holes in his logic. The co-op shuttered in October 2023, and it had been inactive for the entire year leading up to that point. People had struggled to keep investing their time on a volunteer basis, Robey and myself included. It’s a far too common story among cooperatives: without sufficient funding, burnout spreads through the org, as the weekly contributor calls and social media updates dwindle, then cease altogether. Could a firm like Variant have come to our rescue? We were doing our part to turn internet users into co-owners. We were experimenting with blockchain-native tools and wanted to keep exploring use cases. No matter – the investfluencers wouldn’t have saved us.

The argument that Robey makes now could’ve been made back in 2009: the investor class’s support for Uber, TaskRabbit, and the so-called “democratization” of labor via smartphone apps could’ve been mistaken as indicative of a leftward shift which likewise never existed to begin with. Workplace democracy most often isn’t given a chance to succeed because investors don’t want to put money into something that doesn’t guarantee them more equity than everyone else. That fact alone means any crypto project that ensures democratic ownership suffers from all the same problems as a normal platform co-op built with Web2 tooling. So much for “leftist products” in Web3.

The blockchain’s ability to hold and preserve data in a transparent fashion can serve platform cooperatives that want to make it clear who their owners are at any given point in time (this should apply to all platform cooperatives). I once found that technical perk to be an encouraging jumping-off point for more extensive leftist innovation. Now, I look at the wallet addresses that have ownership in DAOs, the kinds of organizations that are predominantly on-chain, only to see that the stakes remain lopsided. Almost always, a small pod of whales rules over a vast sea of guppy-sized owners. Transparent inequality is no more encouraging than if it were hidden away.

In a centralized world dominated by the intertwined powers of machine politics and corporations, projects cannot get off the ground without inevitably absorbing and reflecting the conditions of our global plutocracy. The fallacy that class-conscious VCs and executives could help create a better internet has blinded leftists in the crypto space like Robey from seeing decentralization as something that can and should occur outside the context of Discord servers. Blockchain socialists will never convince anyone else on the left that Web3 is going to upend everything we know about the internet when the approach to funding it, reliant as it has been on Silicon Valley and its extended universe, has been so traditional and unimaginative.

To me, decentralization is a political term, and its definition is direct democracy.¹⁵ It is participatory budgeting and ballot initiatives – anything that diminishes the authority of politicians and allows citizens to be their own policy makers. Such legislative processes already exist in many cities and states both red and blue. They can of course be improved and expanded. Leftist innovation must do precisely that. The alternative, continuing to tinker with tools like DAOs and NFTs, only distracts from building up the sociopolitical conditions which could enable DAOs and NFTs to reach their egalitarian potentials.

The Ownership Economy is frivolous, and Variant has nothing to offer people who care about the internet as a public good. We already have a name for a financial system that encompasses democracy, fairness, and collective ownership. It’s called the solidarity economy, in case certain people needed that reminder. ~

This article first appeared at Strange Matters, a registered worker cooperative.