Mike Jones has made a career of figuring out where the world was headed before it got there.
The former CEO of Myspace is also the founder and CEO of Science Inc., a studio and venture fund. This firm builds on that philosophy by finding the companies that will shape the future, investing in them, and identifying trends they can share across their portfolio of companies.
Companies can be supported with venture capital. Science, Inc. also has a liquid traded hedge fund focusing on crypto and founded one of the first regulated crypto banks.
Why this cryptocurrency cycle is different (Hint: It’s who’s investing)
Jones said this is the third crypto cycle Science, Inc. has been through as investors, and this one’s a little different. Unlike the previous two, he sees more institutional engagement as companies build Web3, tokenization, and crypto strategies.
In addition to his usual investing discussions with startups, Jones is meeting with Fortune 500 companies.
“We fundamentally believe that there’s a bunch of capital that will enter in this market, and there’s a bunch of massive corporations that are going to start engaging in their Web3 strategies to also lift the market,” Jones said.
“We’re the most bullish we’ve ever been around it. It’s going to recover, whether, in months or years, I don’t know relative to price, but I would say I’ve never seen so many companies engage in Web3 strategies with the underlying technology we see now.”
Jones sees several emerging themes, beginning with creating new types of financial products for large corporations. Another is developing technologies supporting shared ownership, transfer of ownership, and proof of ownership around NFTs.
Decentralized data and trustless systems are a third, while a fourth is developing ways to allow community members to participate in the growth of businesses they are investing in.
How online activity has changed from Myspace to Science Inc.
Has the nature of how we interact online since the Myspace days changed? Have the advancements in technology and the emergence of Web3 influenced that trajectory?
Jones sees several good reasons Web3 should interest social media companies, but consumers don’t care about those factors. He said social products are about identity, community, friendship, love, sex and expression.
There are compelling reasons why users should be more comfortable if the data they generate on social media is stored on a decentralized blockchain instead of with a centralized company. No one’s developed the right concept so far.
“No one’s built, I would argue, a use case driving hundreds of millions of users to engage in it collectively. So I think the back end and the systems around Web3 are strong for social, but I have not yet seen a startup that will rival any of the current social platforms.”
How data restrictions hurt web experience
The recent focus on privacy and data restrictions has hurt the social experience, Jones said. When data was more freely exchanged, the advertising experience was relevant to users’ needs and wants. With new restrictions and government attention, he believes the advertising experience is much less relevant because advertisers lose their ability to target audiences closely.
Users don’t have much control over who gets access to their data, nor do they get paid for it. Some are willing to allow companies access to their data, making blockchain technology feasible. Such a system enables the user to control access and get paid for it. That leaves a more rewarding online experience, no matter your stance on privacy.
“It’s putting those controls into those users’ hands,” Jones said.
“That would be a great use case. Whether that comes to bear fruit at some point, I’m not sure who will build that. It will require a platform that rivals Facebook, but I argue it benefits the consumer.”
Challenges facing data monetization hopefuls
Over the past five years, several data monetization companies have emerged but haven’t gained much traction. Are we too early in the curve for that?
Perhaps we are too late in one sense. Social platforms are about mass momentum, and the current leaders have established a presence. No platform has attracted enough users that migration becomes expected. The technology exists, but no one has yet built a compelling use case worth investing in.
Why gaming, entertainment drive Web3 innovation and investing
Gaming and entertainment have been the entry point for new technologies, and they are driving the Web3 experience. Some have argued that it is because they are less regulated than healthcare and finance. That has a role.
But more societal reasons are at play, Jones explained. The use of virtual meeting spaces has surged over the past two years, yet the Zoom experience is nothing like Fortnight. Why can’t you buy outfits for Zoom meetings like you can on Fortnight?
“That has to be coming,” Jones said. I think Zoom is the metaverse, the metaverse without avatars and icons. We’ve previously done this in person, and now we’re doing it online. Video games are the forerunner. The reality is that’s going to saturate everything else.”
Consider upcoming generations and their experiences, Jones advised. They’ve built worlds and relationships in video games. Their virtual relationships rival their physical ones in importance. Video games are interactive experiences.
“When you enter a Fortnight tournament, and you’ve got 100 players that you have audio chats with, building new friendships, that is your playground, that is your social experience,” Jones said. “It’s generational. This is how these kids have grown up. And the reality is that they will expect that to continue. If they grew up with virtual friends and virtual outfits, trust me, when they go to the work world, they expect that to continue in whatever form. They will naturally spend money on virtual things because they grew up doing it.”
What role will financial services have in the metaverse?
So how do older, established companies dip their toes into a virtual world of the metaverse, TikTok videos, and chatbots? One that comes with a high level of customer sophistication and expectations?
Very carefully, Jones said. While no one will approve a healthcare-focused, diagnostic chatbot, Jones suggested that many folks are already engaging in such behaviors online. We get sick, Google our symptoms, and read up on it before going to the doctor.
A bridge is coming. Chatbot technology continues to evolve. He said that Science Inc. works with a company that’s ingesting millions of data points to build a better bot.
What role should financial services companies have in the metaverse? That’s a tough one, as friendships rule the day there, Jones said. NFTs could be critical, as they represent items of value that can be exchanged. Those items exist in the real world, and they also exist in the metaverse. That means loans, collateralizations, investing options, and other products could follow.
“My guess is it’s more about how the financial services companies deal with things that have a virtual value that is tied back to NFT- or blockchain-based ownership,” Jones said. “How do they create standardized products? At what point can I connect my wallet, and they can scan for entities I hold and loan against them?
“At some point, that will happen. At some point, my mortgage might also be represented. They might be willing to loan me against that mortgage because it’s true legal tender representing ownership.”