I recently read a young developer's postmortem on his experience cofounding a web3 startup as a crypto skeptic. As someone who also was (and still is) a crypto skeptic and (stupidly) chose to cofound a web3 startup with some acquaintances back in 2021, I can empathize with him a bit.

I know nobody is going to feel sorry for me, but I had a much worse experience than the author. I may have gone into the space a little skeptical, but came out of it deeply cynical. And I want to reflect a bit on how that happened.

Building a "Web3 company"

It felt like the company-building process worked in reverse in web3. For the most part, these companies were not identifying a problem space, building out a solution, and selling it to customers to make money.

Instead, they would cultivate a following on Twitter or Discord, with vague promises and cryptic announcements about an upcoming launch. Often the launch would include a "mint" of the project's proprietary tokens. The mint would have a limited supply, and be time-boxed... if you're not fast enough, you might miss it! Maybe if you're lucky, you'll earn a coveted spot on the whitelist... but either way, mark your calendar, and have your wallet ready!

And then they would launch.

Many launches were just a fart in the wind. But others would raise hundreds of thousands — sometimes even millions — of dollars worth of ETH. And it was then, and only then, that the founders would start to ask themselves the question, with the utmost earnestness: "how can we give our tokens utility?"

From the outside, this looked like shameless grifting. But a lot of these founders drank a bit too much of their own Kool-Aid. They convinced themselves that if all these people gave them all this money, they must've done something of value, right? They must be onto something... right?!

Azuki: A case study

One of the most egregious examples of this behavior was from the founder of the Azuki NFT project, one of the most highly valued NFT collections in the space.

Several months after Azuki's successful launch, news came out that the founder had been involved in a few other NFT launches under different identities (including one case where he pretended to be a woman), and that he had abandoned these projects after they failed to gain traction. But he conveniently decided to hang on to the proceeds from the mints, which amounted to a few million dollars, give or take.

When confronted, he defended those (million dollar) mistakes as "learning experiences". Without those "lessons", Azuki wouldn't be what it is today (one of the most successful grifts of the past decade?), or so he claims.

The funny thing is, part of the reason the NFT market has tanked over the past couple weeks is because of Azuki. Why? Because they decided to launch another collection of 20,000 jpegs, that look almost identical to the 10,000 jpegs they launched already, for a grand total of 38 million dollars. This pissed a lot of people off, and triggered a huge sell-off.

But it doesn't change the fact that the Azuki team now has an additional 38 MILLION DOLLARS in their treasury. Sounds like a pretty good learning experience, am I right?

Why won't they go away?

The depressing thing is, despite all the evidence that these projects are built on hype and vaporware, I still don't think they're disappearing anytime soon. They have an insane amount of money at this point. On top of that, they've developed a borderline-religious following; a cult, fueled by greed.

The clever thing about these NFT projects is that their "customers" also happen to be their "investors". When people buy one of their tokens, they're often treating it as an investment in the "team". They're buying with hope that the price will go up, so they can sell it to a bigger idiot in the future.

And how do they make the price go up? By trying to convince everyone else that it's an amazing investment.

And how do they do that, when the project is creating nothing of any discernible real-world value? By going on Twitter and fawning over what a "passionate team" Azuki is; what a "strong community" Azuki has; what "legendary art" Azuki has created.

The cult has become too strong, and there are too many rich people with too much to lose to let it fail anytime soon.