The Twenty Minute VCIan Lee: Why DAOs Will Replace Venture Capital; Biggest Threat to Web3 | 20VC #893
CHAPTERS
- 0:00 – 2:50
From builder to investor: why Ian initially avoided venture capital
Ian explains that his early exposure to venture capital felt too detached from the craft of building. He contrasts hands-on work (art, factory-floor consulting) with the perceived distance of investing, and why his perspective changed over time.
- •Early venture exposure convinced him he didn’t want to be an investor
- •Identity as a builder: valuing craft, operations, and making things
- •Investing felt “one or two derivatives” away from real creation
- •Shift in understanding: appreciating the leverage and impact of capital allocation
- 2:50 – 3:23
Entering VC through Citi Ventures and an operator’s lens
Ian describes how he re-entered investing via Citigroup’s venture arm, focused on emerging technologies and commercialization. The operating role pulled him closer to startups’ real problems, eventually turning him into a full-time VC.
- •Joined Citi Ventures to work on emerging tech commercialization
- •Approached investing through scaling and go-to-market execution
- •Increased exposure revealed the real impact of investing
- •Transitioned into a full-time VC after gaining appreciation for the role
- 3:23 – 6:13
How Syndicate emerged: ICO lessons and a “network-native” VC model
Ian traces Syndicate’s origins to frustrations with traditional VC centralizing ownership in community-oriented networks. He frames ICOs as a flawed but important experiment in open participation, inspiring the search for a decentralized venture model.
- •Web3 networks ‘want’ community ownership; VC model centralizes wealth/control
- •2017 ICOs: democratically open investing, but problematic regulatory execution
- •Core question: can venture capital become decentralized and community-based?
- •Syndicate’s aim: turn investing functions into internet-native software primitives
- •Goal: make investing more accessible, fair, and global
- 6:13 – 9:23
Why DAOs will become the future of venture: a decades-long decentralization trend
Ian argues DAOs are a continuation of investing’s long move toward decentralization, predating crypto. He connects AngelList-style syndicates and angel collectives to DAOs, which coordinate financial and human capital natively online.
- •Investing has been decentralizing for 20+ years (e.g., AngelList)
- •Rise of angels/solo capitalists created competition and collective behavior
- •Collectives re-create VC support functions in a distributed form
- •DAOs coordinate capital + people quickly, cheaply, and efficiently online
- •Syndicate is betting that DAOs are the ‘logical extreme’ of this trend
- 9:23 – 13:01
DAO membership, scale, and what’s still unresolved
Harry presses on who gets into a DAO and how big it should be. Ian responds that DAOs are still early and many governance patterns are experimental, but purposeful, tightly-mandated DAOs show stronger staying power.
- •DAOs are immature: norms around size, membership, and governance still forming
- •Historical timeline: DAO (2016) → lull → resurgence (2021+)
- •Best practice emerging: explicit purpose/mandate improves longevity
- •Examples: ConstitutionDAO-style mission vs. long-lived investing mandates
- •Purpose helps define membership criteria and interaction patterns
- 13:01 – 17:06
DAOs vs traditional VC funds: pragmatism, skeuomorphism, and ‘new-to-world’ orgs
Harry challenges whether DAOs simply recreate LP-to-GP delegation with new labels. Ian agrees near-term DAOs may look like familiar structures, but argues the bigger opportunity is enabling fundamentally new internet-native organizations—more like subreddits than firms.
- •Near-term DAO adoption will include ‘skeuomorphic’ fund-like structures
- •DAOs can transform existing entities (funds, corporations, LLCs)
- •Also enable new org forms and platforms that don’t exist today
- •Long-run view (10–20 years): new-to-world markets may outsize legacy ones
- •Key nuance: DAOs are both an upgrade path and a novel organizational primitive
- 17:06 – 21:35
Winners and losers in crypto investing: ‘native capabilities’ and participatory investing
Ian breaks down how Web3 changes what founders need from investors. He warns that non-native VCs can harm networks (e.g., dumping tokens due to lack of custody/staking capabilities) and predicts participatory, user-like investors will win.
- •Funds must build Web3-native capabilities to sustain an edge
- •Founder needs include decentralization operations: nodes, staking, custody
- •Token dumping by traditional funds can damage networks and decentralization
- •Web3 blurs investors and users (NFTs/tokens make users into owners)
- •Winning investors will be active participants, not just capital providers
- 21:35 – 23:54
Can smaller investors ‘follow’ leaders like Electric Capital? Hybrid skill sets in Web3
Harry asks whether he can piggyback on Web3-native leaders rather than building full infrastructure. Ian agrees partnership strategies can work, and argues Web3 won’t replace Web2 overnight—success will blend new native skills with timeless functions like hiring and distribution.
- •Copy/partner with Web3-native leaders can be a viable strategy
- •Not everyone must go ‘all in’—value can come via complementary strengths
- •Web3 is an evolution of the internet, not a separate universe
- •Traditional strengths (hiring, marketing, distribution) remain critical
- •Early adopters who go deep can build durable advantages
- 23:54 – 30:32
Crypto as the future internet: protocols capturing value and the ‘ownership’ shift
Ian outlines Web1 (decentralized but no native value capture), Web2 (centralized apps capture value), and Web3 (protocols/networks capture value). He frames the promise as broader co-ownership of platforms—users sharing upside rather than value concentrating among founders and capital.
- •Web3 enables internet protocols/networks to create and capture value
- •Value capture shifts from centralized firms toward decentralized networks
- •Web2 wealth concentrated among founders/VCs/public market capital
- •Web3’s ideal: users/operators become co-owners of networks they sustain
- •Illustration via Uber: massive network value vs. limited stakeholder upside
- 30:32 – 32:38
Will Web3 increase inequality? It can do both—design and incentives matter
Responding to historical patterns, Ian says Web3 can both decentralize and concentrate wealth. Outcomes depend on how builders, investors, and communities design systems, incentives, and governance—similar to social media’s mixed impact.
- •Technology is neutral; outcomes depend on application and design
- •Web3 has strong potential for both decentralization and centralization
- •Social media analogy: activism benefits alongside misinformation harms
- •Core responsibility lies with builders/investors/communities
- •Medium-term risk: profit-seeking behavior undermines intended impact
- 32:38 – 37:46
Biggest opportunity now: consumer-grade UX, onboarding, and global access infrastructure
Harry argues the biggest opportunity is making crypto usable for mainstream users; Ian agrees. Ian connects better interfaces and infrastructure to unlocking builders and investment beyond wealthy early adopters, especially in underserved geographies.
- •Current Web3 user base is small due to complexity and cost
- •Wallet/key management is a major barrier for billions of potential users
- •Consumer-grade UX and infrastructure are prerequisites for mainstream impact
- •Better onboarding expands markets beyond wealthy/connected early adopters
- •Infrastructure unlocks more builders and more equitable use cases
- 37:46 – 41:34
Storytelling and inclusion: bridging the ‘in-club’ culture to invite new talent
Ian argues Web3 underinvests in storytelling that explains meaningful societal value beyond trading profits. He calls for narratives that welcome outsiders, broaden participation (including women and people of color), and inspire builders to create for more diverse markets.
- •Storytelling is undervalued and overly dominated by profit/trading narratives
- •Exclusionary ‘you’re in or you’re out’ posture limits mainstream adoption
- •Need narratives that empower skeptics and newcomers
- •Diversity of builders influences which markets/products get built
- •Inclusive messaging is essential to reach Web3’s societal potential
- 41:34 – 43:58
Biggest threats to Web3: short-termism, hacks, and setbacks (plus regulation)
Ian lists near-term risks—regulation, centralization, and extreme profit seeking—but focuses on how exploits and rug-pulls erode trust and delay progress. He cites Mt. Gox and the original DAO exploit as examples of incidents that set the industry back years.
- •Threats include regulation, centralization, and profit-maximizing behavior
- •Exploits/rug pulls harm users and slow adoption through lost trust
- •Mt. Gox and 2016 DAO exploit as historical setbacks
- •Not all failures are malicious, but impacts are real and compounding
- •Long-run optimism: resilient, problem-solving networks should outlast scams
- 43:58 – 46:33
VC ‘tourists’ in Web3 and the cycles of hype: time reveals who’s serious
Harry vents about sudden Web3 rebrands and trend-chasing; Ian admits it’s frustrating but cyclical. He notes that while most tourists leave, a meaningful minority become long-term contributors, and patience is required to see who stays.
- •Hype cycles bring in short-term participants and opportunists
- •Ian avoids much of the social signaling but recognizes it as part of adoption
- •Some apparent tourists become excellent builders/investors
- •Cycles repeatedly shake out 90–95% while retaining 5–10% committed talent
- •Long-term relationships form among those who remain through downturns
- 46:33 – 50:34
Quickfire: books to understand disruption and Web3’s business model shift
Ian recommends foundational reading to understand why incumbents miss disruptive shifts. He highlights ‘The Innovator’s Dilemma’ and points to curated Web3 resources (a16z crypto canon) plus Jesse Walden’s ‘ownership economy’ essay to grasp Web3’s business-model implications.
- •Favorite book: ‘The Innovator’s Dilemma’—tech shifts hide business model shifts
- •People dismiss NFTs/DAOs superficially and miss deeper economic changes
- •Suggested primer: a16z Crypto Canon for curated learning resources
- •Jesse Walden’s ‘Ownership Economy’ as a key Web3 business-model articulation
- •Beginner’s mindset is valuable for first-principles clarity
- 50:34 – 58:34
Quickfire: changing his mind on NFT timing, building Syndicate, and $1B DAO investing
Ian shares he underestimated how quickly NFTs would become culturally powerful, accelerating timelines for NFT-powered commerce and media. He also describes the hardest part of building Syndicate—securing and coordinating broad ecosystem help—and closes with thoughts on DAOs deploying $1B (with BitDAO as an early example).
- •Changed mind: NFTs’ impact arrived sooner than expected (culture + identity)
- •NFT-powered versions of major platforms may be built in 1–3 years
- •Hardest part of Syndicate: asking for/helping coordinate ecosystem partners
- •Large ‘party rounds’ brought support but made cap table complex
- •$1B deployment: already plausible (BitDAO); broad scaling may take 5–10 years
