a16z Partner: Positioning Yourself in the Flow of Capital is the True Moat

Original title: The Money Flow Is the Moat

Original author: Jason Rosenthal, a16z crypto partner

Compiled by: Peggy, BlockBeats

Editor's Note: The core judgment of this article is straightforward: the flow of money itself is the moat. Looking back at business history, many of the most powerful companies didn't just succeed by selling products; they positioned themselves at the center of "value flows," continuously taking a cut from every transport, payment, transaction, ad conversion, computing call, or order flow. Railroads profit from the flow of goods, Visa charges fees on a payment network, Google and Meta capture the gateway where attention converts into commerce, and AWS sits at the center of computing flow. As long as value continues to flow through the network, the network itself gets stronger.

Crypto has made this model native to startups for the first time. Blockchains provide open ledgers and programmable settlement, stablecoins allow money to flow globally at internet speed, and token mechanisms bind users, developers, and network growth together. For crypto entrepreneurs, the real opportunity isn't just building a new application, but finding the value channels in the old system that have the highest costs, lowest efficiency, and greatest rent extraction, then compressing them, restructuring them, and positioning themselves within the new money flow.

The article emphasizes that the most rent-extractive and inefficient links in traditional financial services—payments, custody, lending, foreign exchange, clearing, market making, etc.—will all become entry points for crypto entrepreneurs to restructure: compressing costs, increasing speed, and redistributing value. Moreover, this "money flow business" (taking a cut based on traffic within a value flow channel) won't stop at the financial sector. In the future, it could extend to emerging markets like GPUs, AI training data, energy, robotics, space, and rare earths.

For founders, the key question is: Is your product already within a value flow? When the activity on your network scales 10x, will your revenue scale proportionally? Opportunities are often hidden where old infrastructure is least efficient but extracts the most profit. Whoever can compress old costs and embed themselves in new flows has the chance to turn money flow into their own moat.

Below is the original text:

Historically, many of the best businesses were built by inserting themselves directly into the flow of money—facilitating the creation and transfer of value across a network and taking a cut. The more value that flows through the network, the larger these businesses tend to grow.

Crypto is the first modern technology built natively for this purpose. If your startup isn't designing its product and business model around these principles, you are missing an opportunity. Especially with the advent of stablecoins, money and value can now flow at internet speed: settling globally, running 24/7, and with end-to-end programmability. The underlying rails are open, the unit economics are public, and the addressable money flow market encompasses nearly every dollar that moves globally.

This Model

Blockchains are naturally networked businesses. Every transaction settles on a shared ledger; every new participant strengthens the same underlying infrastructure that subsequent users will continue to leverage. As more people use and build on it, the network becomes more valuable for all users.

Most companies spend years trying to artificially create network effects on top of legacy infrastructure. Crypto entrepreneurs inherit these network effects from day one.

Network tokens amplify this further. A well-designed token can align users, developers, providers, validators, and the protocol itself around a single goal: growing the network and distributing rewards based on each participant's contribution. Protocol revenue belongs to those who actually use it. No kickbacks, no side deals, just a positive feedback loop where value flows through the system and back to those who build and drive its growth.

This isn't a new model. Crypto just makes it easier and more scalable for startups to adopt it for the first time.

Railroad companies didn't make money selling locomotives; they profited from every ton of grain, coal, and steel that traveled across their tracks. Standard Oil, U.S. Steel, and AT&T were companies built on money flows. Google and Meta didn't replace print and television because their ads were inherently better, but because they inserted themselves at the critical juncture where attention converts into commerce, taking a cut from trillions of dollars of commercial intent. AWS sits at the center of computing power flow.

The pattern is consistent: find where value flows, and place yourself in the middle.

Financial markets make this pattern even clearer. Visa processed $15.7 trillion in payments in fiscal 2024 and recorded $35.9 billion in net revenue. Jane Street's net trading revenue last year reached $20.5 billion, surpassing Citigroup and Bank of America. The top five US market makers handled 87% of payment for order flow: they aren't predicting markets; they sit in the middle of every order flow and earn more as trading volume grows.

These enterprises also share another commonality: network effects. Visa is more useful to merchants the more cards are issued, and more useful to cardholders the more merchants accept Visa. The same holds for order flow: each additional broker compresses spreads, attracting more brokers, which in turn attracts more order flow.

Money flow combined with network effects is one of the most durable structures in business history.

Your Margin Is My Opportunity

Jeff Bezos once said: "Your margin is my opportunity." He was talking about retail, but this statement applies even more to traditional financial services—the world's largest pool of rent extraction. Payments, custody, lending, foreign exchange, securitization, clearing, market making—all of it. Visa and Mastercard charge 2% to 3% interchange fees on a network designed in the 1960s; cross-border remittance corridors charge 6% to 9%; prime brokers and custodians take a cut from every securities trade. Even after the US moved to T+1 settlement in 2024, capital still sits idle overnight, representing a structural cost borne by all participants.

These profit margins are all targets. Compress costs, increase throughput, and potentially expand the entire market. Stripe and Square have already proven this in payments.

Crypto entrepreneurs have the opportunity to build the next iteration: programmable, instant, global, and natively positioned within the money flow.

And this frontier extends far beyond financial services. Computing power and GPU markets, memory chips, AI training data, energy, robotics, space, rare earth metals—every sector could see massive global flows of value, and existing infrastructure wasn't designed to handle this scale.

Every sector represents an open market where money flow businesses can be built on programmable infrastructure from day one. No existing rails, no entrenched intermediaries, no legacy interests to defend.

As a founder, you should ask yourself:

1. Are you already positioned within a flow of money today?

2. When the value of activity on your product grows tenfold, will your revenue grow accordingly?

3. If you're building a new product, where in your target market is there the highest profit extraction relative to the value being created?

The opportunity is there. Compress it, embed yourself in the new value flow, and let the network start compounding from there.

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