Conversation with Suji Yan: Resist the giants and become the giants
Original Author: Guo Yunxiao
Original editor: Liu Jing
Original source: Undercurrent Waves
If fast life and fast death are the eternal characteristics of the Internet, then in the Web3 world, the cycle of life and death is compressed to the extreme: a Web3 project may only be half a year or even shorter from birth to death. This forces the founders of Web3 to become home run players faster - such as establishing CVC earlier.
Mask Network was established in 2017, focusing on the bridge from Web2 social to Web3. The initial product form is to allow users to post encrypted tweets on traditional social networking sites such as Twitter and Facebook to protect their own information from being obtained by the platform. Later, it evolved into users using existing social networks to achieve decentralized communication, Pay rewards, file storage and sharing and other functions. This social-based infinite extension attribute allows Mask Network to continuously accommodate more content and expand a richer ecology until it becomes one of the most experienced players in the Web3 social field.
In the past two rounds of Web3 cycles, Mask Network was a survivor after the big waves washed away the sand. Recently, Mask Network’s strategic investment completed the first pass of the fund and launched a new brand name, Bonfire Union. In the traditional world, the figure of 42 million US dollars is really not big, but for Mask Network, it means that they can not only leverage the Web3 social pattern from the perspective of products and network protocols, but also have incubation and cultivation in line with the spirit of encryption and Open source spirit, creativity, and the ability of visionary project parties to gain greater influence in the Web3 landscape.
In the interview, Suji Yan described the establishment of this fund as follows: "GPs and LPs saw these early incubations and investments, so they might as well start a Fund." A considerable part of Mask Network's investors became Bonfire Union's LPs, and other investors People also include former or current executives/partners from various fields, including well-known Web3 project parties, top dollar venture capital funds, leading financial companies, and leading Internet companies. In fact, before this, Mask Network has extended its tentacles to most of the known subdivision tracks of Web3 by means of incubation, cooperation, and investment.
As the soul and founder of Mask Network, Suji Yan shows himself as a "Web3 evangelist" all the year round. Graduated from the same high school as Han Han, he seems to have a similar character to this former rebellious teenager. After going to the University of Illinois at Urbana-Champaign to study computer engineering, he dropped out of school. During his exchange in Japan, he also worked as an independent reporter for Caixin Media to report on the Fukushima nuclear power plant. During his future work as a self-driving engineer in Tucson, he came into contact with the blockchain, and then met his current wife, a Bitcoin core contributor. Under various influences, he entered the encryption world, and then founded Maskbook (later renamed Mask Network).
Even in the Web3 circle, Suji Yan's deviant image is quite prominent. For example, in order to express his rebellious spirit, he was interviewed as a "programmer in women's clothing", and he and his wife co-founded "Anti 996 Lisence" to resist what they believed to be an unreasonable Internet industry work system, and more often mentioned in social media. There are endless criticisms in the media.
Suji Yan's language is full of philosophy and historiography. In the interview with him in "Undercurrent Waves", he answered almost every question with allusions, trying to connect the past, present and future of human beings in the digital world, as well as the inextricable connections between them. In his view, the Web3 digital revolution follows the trajectory of human development and occurs naturally. Perhaps influenced by him, everyone in the investment fund of Bonfire Union also has a strong sense of idealism. For example, the partners Cecilia and Taylor who have joined in succession also use the word "digital revolution" in unison.
But they also mentioned a vision at the same time: to be a Tencent war investment for Web3. This comes as a surprise:Web3 is widely understood as an anti-giant and anti-monopoly form of the Internet. In this eccentric industry, countless people manipulate words such as encryption, consensus, and decentralization, and use ideals to whitewash their desire for business success or wealth. On the one hand, the Suji are trying to fight against giants, but at the same time they do not shy away from their ambition to become giants.
first level title
Focus on the three major sectors, the digital world can break the physical boundary
"Undercurrent": There are no real giants in the Web 3 world, and CVC is only common in exchanges and public chains. What is your investment logic?
Taylor：I think it is still an ecological concept. For example, starting from the smallest idea, we provide a small "dropout scholarship". Afterwards, we also sponsored grants on gitcoin, giving thousands to tens of thousands of dollars of financial support to Web3 social related projects. For some projects that may be difficult to have commercial possibilities, we will choose the form of donation. A little bit bigger—for example, at the “ETH Shanghai” hackathon we hosted at the end of May this year, if the founders want to formally raise funds after winning the award, we can use Bonfire Union as the main investment, and the single investment amount is about 200,000-1 million between dollars. For those very mature projects, even without our investment opportunities, we will cooperate with them ecologically. To put it simply, the ecology is established from childhood to adulthood. Our strategies can cover projects at all stages.
According to the above logic, we will look at the three major areas of social networking, infrastructure and entertainment.
"Undercurrent": In the past three months, many areas of Web3 have slipped. What is the priority of your investment layout?
Suji Yan：Indeed, projects such as social networking, entertainment, and DeFi have basically disappeared. It is even difficult for you to find companies worth three to five billion dollars from the market. But investment must pursue super-large targets, such as Ethereum, which can last a lifetime. The essence of human beings needs to be social. Comparing with the world of Web2, there will be hundreds of billion-dollar companies on the social track.
"Undercurrent": Social networking is the origin of the Web2 era and extends to everything. Will this logic be reproduced in Web3?
Suji Yan：Mask Network is basically the earliest social project that is still alive in Web3. Social networking is naturally inseparable from many other fields. For example, posting pictures is one of the most basic social needs. It has existed since Web1. The technologies in it include CDN, database, social graph, and there may be a bunch of AI algorithms behind it, etc., all for users to see To this picture sent by the other party. In Web3, these basically need to be redone. Google Cloud or AWS may be very powerful, but after decentralization, its storage method has completely changed.Similarly, the social outreach opportunities are almost a repeat of the past, and these are investment opportunities.
"Undercurrent": Many views believe that the most important thing about Web3 at this stage is "new pull". Will your investment focus on this?
Suji Yan：Pulling new stuff is all set in a bull market. But when we invest, we must first think about what the investment is. For example, we are willing to buy a front row auditorium occasionally to see new things, but the more important thing is whether it can generate value, which is especially important in Web3. .
Taylor：Pulling new ones is a very important theme in Web3 investment. We have invested in protocols and infrastructure, but pulling new ones is more a matter of the application layer. At the application layer, how this new development is done is worth dismantling and discussing slowly. Some new developments are particularly unsustainable. We have seen too many subsidy wars in Web2. In Web3, there is not much difference between XX and earn. It is very important whether new users use the product to gain wool or become part of a good network effect.
Cecilia：Many Single IP GameFi projects look very good, but Web3 games are not purely operational products. Many token transactions in the primary and secondary markets have been added, and they cannot escape the entire Crypto market cycle. A GameFi project lacking a benign tokennomics design can hardly live to the length designed by the project party.
"Undercurrent": What is a "good Web3 investment"?
Suji Yan：Many people think that Web3 has no value.I believe that the value comes from the digitization of human society. The process of digitalization will not stop. In the future, there will be a super-sovereign digital world parallel to the real world.The new world needs new banks, new movie theaters, new post offices, etc. There are countless new opportunities here. Stick to decentralization and you can become part of these things.
Cecilia：Even in the field of entertainment or GameFi, we invest in projects that are relatively infrastructure-oriented. For example, we invested in double jump.tokyo. They help many IPs of well-known Japanese game companies to do blockchain adoption. This matter itself is sustainable. It can be supported for a long time to unlock and has a relatively stable performance in the market.
"Undercurrent": How to identify and control the risks in Web3 investment?
Suji Yan：We will separate some donations from real investments. First of all, we have a lot of donations to support public good. These are all funded from Mask Network's DAO. This part is more like a university endowment fund and has nothing to do with the main body of Bonfire Union. Second, we don't take large positions or put money into DeFi protocols.
"Undercurrent": Overseas funds are less exposed to Chinese projects, and domestic US dollar funds are less exposed to overseas original projects, but many people will describe you as crossing China and the United States or globalizing.
Suji Yan：We adhere to internationalism, and the digital world has no physical national boundaries.first level title
When Investments Happen in the Web3 World
"Undercurrent": What kind of money do you use for investment - cash, stable currency, or tokens such as Bitcoin and Ethereum?
Suji Yan：We will not set such limits for ourselves, nor will we set limits for investment targets.
In the previous cycle of 2016-18, in fact, a large amount of Web3 investment was in Bitcoin and Ethereum. Because the issuance of stable coins was less than 5 billion US dollars at that time, it could not meet the investment needs of LPs. The project party is also willing to accept Ethereum. In the bull market, the token itself is on the rise. Many projects are also built on the ecology of Ethereum and have received a lot of official help. The problem is that the price of token fluctuates greatly. After several cycles, people still tend to use the U standard to measure the final return on investment. Since 2020, with the emergence of many new compliance structures and stablecoins, the project party will basically not actively choose to take tokens.
From the perspective of fundraising, the current practice in the industry is to raise US dollars and stable coins, which may have different structures depending on the nationality and tax location. In general, what kind of currency or even tokens can be raised depends on compliance capabilities.
"Undercurrent": What is the first goal of Bonfire Union's investment - is it for financial returns, for the ecology of Mask Network, or other?
Cecilia：My previous strategic investment in Okex caught up with the bear market as soon as I joined. At that time, I made more equity investments around the exchange’s ecology, such as the exchange’s infrastructure, trading components, deposit and withdrawal components, and so on. I understand this as a purer battle shot.
In Mask Network, we have two roles. The first one is similar to before. As a plug-in ecosystem, we can cooperate in a wide range, such as deposit and withdrawal, wallets, games, NFT, data analysis tools, Defi, decentralized storage and so on. From another perspective, in fact, seeing Bonfire Union as a separate fund also makes sense. We will make some purely financial investments. Even if there is no direct cooperation between the project and Mask Network products in the short term, we will still invest .
"Undercurrent": What is the difference between you and CVC in the traditional sense?
Suji Yan：Although Bonfire Union is a CVC structure, Mask Network itself is not exactly a company in the traditional sense. You can understand that Mask Network is an important part of the social department in the digital world, so Bonfire Union may be more like the Merchants Office. Our investment serves the entire digital world and gets returns from it, but serving the public good of Mask Network is secondary.
Taylor：The concept of public goods runs through Web3. If you say that the appeal of classical strategic investment is strategic coupling, financial return and trend watchtower, what we do is similar to these, but the deeper level is around public goods, and we don’t need to use strategic investment to deal with competition.
"Undercurrent": Where does the investment team come from? Will you participate in Mask Network business other than investment?
Suji Yan：Before Cecilia joined, he invested in the exchange, and before Taylor joined, he invested in traditional VC. Next, more of my personal energy will still be put on Mask Network. We hope that Mask Network can take root in the social track of Web3, but there are still many problems that have not been resolved in terms of products, technology, finance, etc. Other members of the investment team will participate in the work of Mask Network itself, but most of the energy will be invested and the ecological synergy between our partners and the invested companies.
"Undercurrent": So what is your decision-making mechanism? Are there any special places to invest in Web3?
Suji Yan：It is just an IC. Among the three of us, those who are better at a certain subdivision will have a higher right to speak in the face of the corresponding project.
In fact, there is a characteristic of Web3 investment. Everyone invests very small, and then slowly raises their bets. The macro reason may be that the capital is not as sufficient as the bullets in the previous two years, but there are also some micro reasons. Coinbase, Binance and other centralized exchanges, compliance or auditing projects, this kind of equity project is not a real blockchain project, they do not care about the proportion of shares held by shareholders, but it is difficult for real Web3 projects to accept the emergence For shareholders with a high proportion, the decision-making process will be faster if the overall amount is smaller. The obvious change is that the process of DD will be very different.
"Undercurrent": What's the difference?
Suji Yan：In fact, the traditional DD method is rarely used. The DD of Web3 has become a very internal thing. The team, business model, historical evolution and other information are all published on the chain or written in the code. Several partners can’t see these things, but Mask Network has a very strong technical team that can help us with technical verification, and will also provide technical support for our portfolio after investment. This is our advantage. Excellent Web3 investment institutions like Paradigm must have excellent technical support capabilities.
"Undercurrent": Many early foundations in traditional fields focus on people, but many founders of Web3 prefer to be anonymous. How to deal with this situation?
Suji Yan：Many founders may be semi-anonymous, he will not tell us his real name but abcd.eth, then maybe abcd.eth is his real self. Because all operation records of Web3 are public, the resume of the founder should correspond to the interaction on the chain. When we were in DD, we looked at these more, rather than looking at his name, what he looked like, whether he lived in Alabama or New York, and too much risk control factors.
People in Web3 are still the sum of new social relationships, and they are more direct and transparent.
"Undercurrent": Is the trust between you and the project because you are both builders?
Suji Yan：I understand the bigger reason is because we are Operators. We've been through the whole process firsthand, so we don't ask stupid questions.
"Undercurrent": What is a "stupid question"?
Suji Yan：I contacted a founder, chatted for a while and told me that the product can be launched after getting the version number. For a founder with this mentality, I find it difficult to shoot.
"Undercurrent": What kind of post-investment services are needed for Web3 projects?
Suji Yan：Post-voting is actually solving the problem of "what should I do in a certain situation", so when you ask the wrong question, there is no right answer.I think those stupid questions are not something a Web3 entrepreneur needs to consider. In addition, technical ability is also very important. This may be lacking in most VCs. They cannot support so many programmers, but this is the advantage of CVC.
Cecilia：At the level of strategic decision-making, Mask Network is a project that has gone through the entire process. We can provide some direct experience or indirect experience in the industry. The practical experience in the nascent industry is very valuable. In addition, we have invested in many plug-in projects, and Mask Network can interact directly with these project parties, and we will also promote the linkage between the communities of the invested projects.
Many institutions say that they can introduce resources such as exchanges and market makers. This post-investment service with Web3 characteristics is actually becoming more and more homogeneous. If it’s just a relationship introduction, it’s not very meaningful, and the internal experience of the exchange or personal experience will be much more important. We are entrepreneurs ourselves, so we know better how to help entrepreneurs.
Taylor：first level title
To oppose the giant is to oppose its colonial and unadvanced nature
"Undercurrent": What is the meaning of Bonfire Union?
Suji Yan：On November 5, 1605, Guy Fawkes tried and failed to blow up the British Houses of Parliament (Gunpowder Plot). Since then, Guy Fawkes masks and Bonfire Festival have appeared based on him and this incident. The story is still alive in recent decades. It is constantly being adapted and presented to people. The source of Mask Network's logo is laughing man, which is involved in Victor Marie's novel "The Laughing Man" and the movie "Ghost in the Shell". The two brand names Mask and Bonfire are both homage and interrelated.
Many VCs will call themselves XX Capital or Ventures because they think they are a banker or a capitalist. We believe that Crypto and Web3 are also causes of great significance to mankind.
"Undercurrent": What is the ultimate vision?
Suji Yan：Decentralized digital world.
"Undercurrent": What can ordinary people do in this ultimate vision?
Suji Yan：In fact, the era of the Internet and even the mobile Internet is no different from life in the 1980s. The most important thing is to eat. In the past, I bought it myself, but now it is replaced by takeaway. But the new era will create bigger markets, more jobs, and greater progress. I don't think the lives of ordinary people will change much, but when you look back 50 years from now, you will feel that your current life is unbelievably backward.
Taylor：You have to eat and you have to eat. But just talking about the economic part, this digital world will also be a more efficient and less frictional world.When everything is written on a decentralized platform and becomes a public property, the economic efficiency it brings is actually much higher than before.
"Undercurrent": How do you view the relationship between this "belief" and financial returns in a certain period? Will it conflict?
Suji Yan：The short-term is definitely conflicting. But in the long run, you will find that "investing in the digital revolution" is right, and everything else is wrong.
Cecilia：In fact, embracing the ideology of Web3 is a disguised guarantee for medium and long-term returns. We have seen too many projects in Silicon Valley. The founders have a good background and have received investment from large funds, but their performance in the secondary market is not good in the end. Because he just thinks that Web3 has desirable technologies, but he still uses the thinking of Web2 in the process of operating the project, and he may not even figure out how to do it.
"Undercurrent": Many people also criticize Web3 for being too heavy on financial attributes. What's your opinion?
Taylor：It's a bit like the early Americans went to the west to pan for gold. Gold panning is like the financial attribute of Web3, but all kinds of things will follow. This matter has already started and there is no turning back. It is certain that various things will be built one after another. Now when we mention San Francisco, the first thing that comes to mind is an international metropolis, not a gold rush place in the past, even though the name is so straightforward.
Suji Yan: I think everyone's criticism is right, too much financialization is not good. But more open finance and more comprehensive market-oriented reform must be progressive and advanced, and the forces opposing it are partial and short-term. We do not make short-term investments when investing, so we don't think short-term opinions are important to us. If we think that there is a digital world that will emerge, it will certainly not follow the existing knowledge, so we need to invest in innovation.
Among them, finance is the easiest to produce results, and it is also a proof of the current stage of Web3. From an investment point of view, the low-hanging financial fruits have been picked up by the DeFi project side, but there are other opportunities, such as games, entertainment, etc. The logic from social networking to these is very similar to Tencent's war investment.
"Undercurrent": What does it mean that Bonfire Union wants to be Tencent's strategic investment in Web3?
Suji Yan：Tencent has made chat based on social networking, and it can also invest in e-commerce, games, and entertainment. We actually invested in this way. If Mask Network is a small Web3 Tencent, then it should be easier for everyone to understand our investment logic by using the analogy of Tencent’s strategic investment.
"Undercurrent": But Tencent is obviously a giant that wants to resist in Web3. Are there some conflicts here?
Suji Yan：Giants are not bad, even monopoly can be understood in terms of efficiency, we do not violate the nature of business.
I think the Internet giants in today’s world can be understood in this way: In the past few decades, the Internet has been a new continent, and these giants are like the East India Company. When they arrive in the New World, they can see that there are digital serfs everywhere, and they can do whatever they want. Although the digital world is not a physically real continent, it is not much different from the world in which human beings exist in essence. It has its natural laws, and private digital property is sacred and inviolable.
What we want to argue is not "whether a huge commercial entity should exist", but its "colonial" and "non-advanced" nature. It is the giants who use user data to do all kinds of things that should not be and are incorrect It is a reactionary and retrogressive social reality.
"Undercurrent": How to ensure that Mask Network "does not go bad"?
Suji Yan：Original link
