In 2007 USV invested in Twitter and Zynga. Both of these companies taught us valuable lessons.
Twitter demonstrated how open social networks could change the way people freely share information across the globe and highlighted how a thriving developer ecosystem could help a new network scale in novel ways. Today, everything about it - from account access to developer APIs, content moderation policies, and the feed algorithm itself - is under the full control of not just a single company but a single person. This is not the ideal outcome for a global information network.
Zynga, on the other hand, experienced both the opportunity and peril of building on top of a growing social platform. They built a thriving business on top of the Facebook network and contributed meaningfully to Facebook’s early revenues. But in the end, Zynga needed Facebook more than Facebook needed Zynga, and it soon found its ability to scale on the network throttled to the point where it had to rebuild its business elsewhere.
Each of these experiences highlights the limitations of building social platforms in a Web2 model. In response to these events and others like them, Fred famously said, “Don’t be a Google Bitch, Don’t be a Facebook Bitch, Don’t be a Twitter Bitch. Be your own Bitch.” We have felt this way ever since.
Fast-forward nearly 15 years, and we now have a chance to chart a new course. Social networks are in the process of being rebuilt onchain atop an entirely new internet architecture.
Today, we are thrilled to announce an investment in Farcaster, a social networking protocol that fundamentally improves on the designs of those before it and is limited only by our collective imaginations.
Farcaster is an open protocol, like SMTP or HTTP, where users can pay for and forever own their usernames, and where all data (i.e. posts/casts, follows, likes, etc.) is stored across a decentralized network of Farcaster Hubs. Users of the network always own their digital identity, content, social graph, and relationship with their audience.
Because the underlying content of Farcaster is totally open, developers can build anything on top of it. The Farcaster team has built their own client called Warpcast, but there are plenty of others. While Warpcast today resembles Twitter and Reddit, it’s also possible to build something that looks like TikTok, something that looks like YouTube, and new things we can’t imagine yet, on top of the same underlying protocol. An ecosystem of applications is growing rapidly, and in addition to clients and larger applications, also includes things like news readers, search tools, bookmarking services, developer tools, bots, and much more. This concept has inspired many internal conversations at USV:
Importantly, every identity on Farcaster is also a crypto wallet, which means that economic activity is a first-class citizen in the system. This opens the door not only for peer-to-peer transactions such as payments and tips, but also for any kind of economic activity related to onchain assets and content, such as NFT minting, royalties, content subscriptions, and referral rewards. This built-in economic fabric enables new business models for developers, content creators, and the protocol itself.
We believe in an internet where developers can permissionlessly innovate, where applications are interoperable, and where protocols can be assembled together like legos. We should directly own our digital identity and content and be able to move our audiences from one application to another. We should be able to harness powerful built-in economic components and explore new business models. And our online speech, businesses, and social lives should not be under the control of a single company.
Farcaster was founded by Dan Romero and Varun Srinivasan, two entrepreneurs who have worked together for years starting at Coinbase. They are students of the consumer internet and social networks and are determined to run this experiment over again, but this time decentralized, open and harnessing powerful crypto-economic primitives.
The social stack is going to be rewritten and Farcaster is playing a foundational role in this new and important chapter. We are honored to support Dan, Varun, and the FC team as they write it onchain.
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