23andme & user ownership
User owned pioneers are creating unprecedented value in new ways, and incumbent businesses are at risk of being disrupted.
Before we get to today’s newsletter I wanted to share a message from a friend at On Deck about their new Health Fellowship:
The On Deck Health Fellowship is a 10-week program for startup and healthcare experts looking to found, join, invest in, and advise health tech companies. The program combines a world-class curriculum with top industry speakers, unique access to investors, and a pre-vetted pool of potential hires to help ambitious builders create the future of the healthcare ecosystem.
During the 10-weeks, you and 120 healthcare innovators will come together to:
Navigate the healthcare ecosystem and identify opportunities for innovation
Build, join, or invest in cutting edge health tech startups
Deepen your expertise though fireside chats and panels with industry experts
Collaborate with a group of talented peers to reshape the healthcare system
ODH is like a rolling industry conference, only better: it’s a space for fellows to deepen their industry expertise, accelerate their careers, and build impactful health tech startups — together.
The inaugural cohort kicks off April 10, 2021. Access to the program, including lifelong access to the community, is $2,480 or five installments of $500.
Limited scholarships are available, so apply early! Link.
I share this because I know many of the folks at On Deck, have been to their events, and think it is a great opportunity. If you apply for a scholarship and want a good word put in for you let me know.
On to the today’s newsletter:
The state of the Internet
It is a striking fact that many of the most important technologies in our lives are contributed to, funded, and operated by their users. To name a few examples, individual users are central to the open source technologies that power the Internet, the content on social media networks, and to the genomic data that giants like 23andme have built their businesses on.
These deeply important contributions go mostly unrecognized and unpaid despite the trillions of dollars in value they help to create. To zero in on one salient example 23andme’s owners will see a multi-billion dollar payday as 23andme goes public in a few weeks. But the millions of users whose data made that possible won’t see a cent.
A better way is being pioneered
A few weeks back I randomly received “TORN” tokens in my Ethereum wallet. With a bit of searching I found out that these gave me voting rights to and cashflows from Tornado Cash, which is a privacy solution on Ethereum. Tornado Cash’s founders wanted to reward and engage their community, so they gave this pseudo-equity out to their users. Tornado Cash has strong network effects; the more people use it the more useful it is. So it makes sense to reward early users who literally made Tornado Cash valuable by using its product.
A growing list of user owned projects have done similar things. These are not paltry handouts either. Uniswap - the largest of them all - gave its users roughly $3bn worth of its token. Anyone who had interacted with Uniswap in the past was given tokens that were worth more at the time than the US government’s stimulus payment. As I write this those tokens are now worth $8,000.
Uniswap, Tornado Cash, and a litany of others are opting for a new type of relationship with their communities. For these projects their users are true stakeholders: not only do they capture part of the value they help create, but they have a real voice. In user-owned projects users govern the products they contribute to, voting, debating, and executing on proposals. In some cases the votes are sealed through code and the proposals autonomously execute. Almost all the time the founders take a back seat, hold a minority of the votes, and become only one voice, albeit a powerful one, among many in these communities.
Ownership has been an incredibly powerful incentive for employees, why would we expect it to be any different for users? Users who are owners are motivated to deepen their contributions, whether that is with ideas, funds, code, evangelism, or something else. Due to this user owned products will scale, iterate, and build deep network effects incredibly quickly. It only took Uniswap 2 years to go from an being an idea to being a multi billion dollar unicorn.
Another way that user-owned products differ from traditional products is how open they are. Their code is open source and anyone can access, build on, and integrate with them. As a result thriving ecosystems have been built around user-owned products like Uniswap, and the pace of innovation in these ecosystems is blisteringly fast.
User-owned products have thrived in decentralized finance today, but they are not exclusive to it. A group of companies like Zora, Foundation, and Rarible are empowering creators to capture more value from their work. Ocean and Erasure give users a way to their data/information. Tech darling Airbnb sought to give hosts equity before ultimately giving hosts the opportunity to buy into their hotly anticipate IPO earlier than the public, as Uber and Lyft did later with their drivers.
How 23andme can engage their users in a new way
Clearly 23andme, a business in a highly regulated industry with physical supply chains, cannot totally decentralize. But they can and should offer equity to their users. Preferably this is freely given, but at a minimum users should be given the ability to purchase shares prior to the IPO. That would give users the chance to participate in the payday 23andme’s owners are now getting. In the future every time someone gets their genome sequenced 23andme should give them shares too.
Moreover, 23andme should follow the example of other user-owned networks and open up, starting with the 3rd party developer API they closed in 2018. By doing so 23andme could grow an ecosystem of other businesses offering analytics and other applications. As a compromise, 23andme could offer an app where users could custody their data on their smart phone and third party developers could submit analytics that would be performed on-device. That setup would let users access different analytics services while preserving their privacy, and 23andme could retain more control.
Whatever way it is done, having such an ecosystem would make the value of having your genomic data even higher. As the premier consumer genomics company this ecosystem would thus drive sales to 23andme, who could effectively become the “digital front door” to that ecosystem. Further, ownership would provide a powerful incentive to users and developers to stay within this ecosystem, thus giving 23andme’s digital front door a deep moat. All parties would win.
User ownership is a competitive advantage
A similar story can be told about many digital health businesses that aren’t treating their users as true stakeholders. It is impossible for these businesses to be truly user-owned, but they can engage with their users in new ways. If their users are core to the success of a business then they should reward them with ownership. Not only does ownership have social benefits, but it is a powerful incentive that will turbocharge businesses. Further, more healthcare businesses should foster ecosystems by enabling users and third party developers to build great things on them. These ecosystems are massive competitive advantages for the core business they are built around, and they deepen the value proposition to users.
Every day the barriers to distributing ownership to users are falling, and a message of collaboration and empowerment is resonating across the Internet. Just as digitally native businesses are disrupting the incumbents, businesses that reward their users with ownership will disrupt the digital natives.
I will end with these edifying words from the Zora Manifesto that capture the mood:
WE WANT TO WIN TOGETHER.
WE WANT TO BUILD TOGETHER.
WE MUST COLLABORATE TO MAKE THIS HAPPEN.
We need new infrastructure, something transparent, ownable, accessible, financially sustainable, where we can share the value we create, something for the community, something that’s ours. It’s not mine, it’s not yours, it’s definitely not theirs, it’s ours. This is Collective Creation. We have the tools, we have the moment, and we have the power. We can take on humanity’s greatest endeavours. We could build cities. We can create so much more.
Are you getting it?
Are you getting it?
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