The pivot to Web3, driven by ideology rather than utility, is akin to a “collective Theranos” that's warping the economy to benefit professional investors
It can feel as if the entire world is bolting on crypto tokens and NFTs. Many in the industry worry the gold rush is akin to a … Tweets: @maxwellstrachan , @martinsfp , @asmallteapot , @ourielohayon , @can , @davewiner , @venkatananth , @carnage4life , @mims , @mikeelgan , @mskidchaos , @jeremiahlee , @fuzheado , @sgwoods , @noahpinion , @ummjackson , and @timmarchman Tweets: Maxwell / @maxwellstrachan : I spent a lot of this year trying to figure out why VCs seem to love Web3 so much—and how that global pivot to Web3 is warping the tech industry. Here is my best attempt at an answer. https://www.vice.com/... @martinsfp : I like to think, were I a VC, that I would stay the hell away from web3 for both ideological and common sense reasons. https://www.vice.com/... @asmallteapot : “Fidelity Investment, the nation's largest 401(k) provider, is allowing people to shove their retirement savings into Bitcoin. Goldman Sachs is offering crypto-backed loans.” Imagine telling this to someone in 2009. https://twitter.com/... @ourielohayon : each internet revolution brings its own pack of haters and criticisms driven by short-term analysis. It was *exactly* the same with early twitter/facebook, with early “mobile apps”. I still have the scars to remember it Keep building. ignore the noise. https://www.vice.com/... @can : excellent, excellent piece. the truth is that many VCs themselves know they are scammed into crypto deals and now can't get out and looking for the next bag holder https://twitter.com/... @davewiner : Stop hyping it. https://www.vice.com/... Venkat Ananth / @venkatananth : an interesting critique of the pivot to web3: “It's like a collective Theranos. A wildly unproven product with nobody at the helm,” per one venture capitalist quoted in this story. https://www.vice.com/... Dare Obasanjo / @carnage4life : This is a great thread on all of the negative incentives being created by VCs which are pressuring founders to create web3 companies. The idea you can create a token and generate a liquidity event for investors without an IPO or acquisition is way too tempting for VCs. https://twitter.com/... Christopher Mims / @mims : This is a really great thread + piece and goes into what are potentially the more sinister aspects of Web3 in a way I did not have the space or time to do more than hint at https://twitter.com/... Mike Elgan / @mikeelgan : No, because there will be no pivot https://www.vice.com/... Mansi P / @mskidchaos : A well written piece by @maxwellstrachan shedding light on the shady incentives for VCs boosting Web3. Let's just say they know things the retail investors don't & the advantage is massive. https://twitter.com/... https://twitter.com/... Jeremiah Lee / @jeremiahlee : Fantastic #LongRead on why Web3 is bullshit—even when occasionally well-intentioned—and why VCs are hyping it. https://twitter.com/... Andrew Lih / @fuzheado : Comparisons of crypto to Theranos and credit default swaps (ie. poorly understood risks resulting in deep disaster) have become more widespread. A good read by @maxwellstrachan with @ProfHilaryAllen on preventing a “major systemic implosion” https://twitter.com/... Steven Woods / @sgwoods : s/web3/?/g “It's like a collective Theranos,” one venture capitalist said. “A wildly unproven product with nobody at the helm.” https://twitter.com/... Noah Smith / @noahpinion : The people quoted in this article making the bullish case for web3 make it sound an awful lot like Amway — mediocre end-use products being sold through “incentives to expand the network”. I hope it isn't just that, because Amway is pretty useless. https://www.vice.com/... Jackson Palmer / @ummjackson : Great piece, well researched and lots of on-the-ground commentary. Not sure how someone can read this and still think it's not super bubbly. https://twitter.com/... Tim Marchman / @timmarchman : If you've been wondering why investors are piling into “Web3” businesses that are obvious scams and why entrepreneurs are putting things “on the blockchain” for no evident reason, here's the story for you: https://www.vice.com/...
Context & Ripple Effects
Strachan's 'collective Theranos' framing lands after months of buildup in this coverage: Stephen Diehl had already argued that crypto tokens let VCs dump investments on an enthusiastic public without regulation, and PitchBook data showed crypto and blockchain startups raising $28B+ in 2021, up 4x year-over-year while large tech companies lost execs and engineers to crypto firms.
What the Vice piece adds is a causal account tying those two threads together: the money and the talent flight aren't independent phenomena but one incentive loop, where professional investors' preference for token liquidity events pressures founders to bolt tokens onto products regardless of utility.
First-order effects
- Founders building consumer or enterprise software face direct pressure to issue tokens instead of equity, because token liquidity events let their VC backers exit faster than traditional paths — the mechanism Diehl described and Strachan now frames as economy-warping.
- The talent drain documented in the PitchBook-era coverage continues to pull engineers out of established tech companies toward crypto startups offering speculative upside, exactly the dynamic the Not Boring piece celebrated as opportunity and Strachan recasts as distortion.
Second-order effects
- A counter-media front hardens: Garbage Day's response argues that calling Web3 'currently sucks' is not an anti-blockchain conspiracy, meaning the industry can no longer dismiss utility-based criticism as hostile punditry.
- Skeptical voices inside tech gain standing — the sci-fi writer's earlier notes that Web3 is expensive, undemocratic, and impedes ephemerality give the Theranos comparison technical substance beyond investor self-interest.
Third-order effects
- If the token-as-exit structure persists, venture returns decouple from product success: investors profit at the liquidity event while users hold depreciating assets, widening what this coverage treats as crypto's legitimacy gap and inviting eventual regulatory scrutiny of unregistered public distributions.
- The deeper risk Strachan flags is misallocation at scale — $28B+ annual flows chasing ideology-driven pivots starves non-token software of both capital and senior engineering talent, a structural drag on the broader startup ecosystem.
The trend: Venture-backed Web3 is shifting from a funding boom story to an incentives story, with token liquidity mechanics — not blockchain utility — increasingly named as the force steering where capital and talent go.