Article author: 0x9999in1
Source: MetaEra
Recently, MetaEra Hong Kong Zone was launched, and the "Hong Kong Crypto New Policy Two-Year Anniversary Celebration" series of activities took the lead in the launch. An important part of it is "High-end Dialogue: Hong Kong Web3.0 Influential Leaders". The person interviewed in this issue is the famous angel investor Cai Wensheng.
Introduction
Cai Wensheng, who was involved in the domain name business at an early stage, quickly became one of the most successful domain name investors in China. In 2000, he entered the Internet field, founded 265.com in 2003, and was acquired by Google in 2007. After that, he transformed into an angel investor, investing in many companies such as Baofengyingyin, 58.com, Wangji Kuaiche, Optimization Master, CNZZ Data Statistics, China Webmaster Station, Yiming China, OKEX, etc., becoming a famous angel investor in China. At the same time, he founded 4399 Games and Meitu Xiuxiu Company in Xiamen. Regarding the coming Web3 era, Cai Wensheng believes that the core change of Web3 is that users can master their own data, and their data can be monetized and become the owner of the platform value. He foresees that Web3 will change society like the Internet in the next 20 years, not only changing finance, but also having an impact in all walks of life.
Highlights
●Everyone should not set limits for themselves and should be exposed to new things or new assets.
●Web3 is different from Web1 and Web2, which is the third generation of the Internet. Its core feature is decentralization.
●I think Hong Kong’s current policy is even ahead of that of the United States. In the future, Hong Kong will have great opportunities in AI data, financial innovation, trade settlement, entrepreneurship and technology innovation, etc.!
●AI represents more of an improvement in production efficiency, while Web3 represents an improvement in production relations. The combination of the two will generate greater value.
●Hong Kong is considered to be the earliest birthplace and cradle of cryptocurrency.
●From the perspective of Web1 and Web2, true success really requires time accumulation. When you invest in the Web3 field, you also need to accumulate time.
●Mainland China is not open to cryptocurrencies at present. I think those who have the conditions should go abroad and develop overseas.
●There is nothing wrong with entering the Web3 industry from cryptocurrency first. Cryptocurrency is just a starting point for Web3. The entire Web3 industry has huge opportunities and space.
Full Interview
MetaEra: From early domain name investment, stock market, Meitu, Bitcoin, to grassroots entrepreneurship, angel investment and other labels have always been with you. What is your attitude towards these labels? Do you like these labels, or are you willing to go beyond them?
Cai Wensheng: Of these labels, the one I am most satisfied with is the angel investor. Because the earliest domain name investment was my personal behavior, and I have also worked in the stock market system. In addition, Meitu is my own startup. However, I have invested in more than 100 projects, and I have been engaged in startups and investments at the same time. Therefore, compared with startups, I am more interested in the label of angel investor. The 4399 Games, 58.com, and OK Exchange that I invested in in 2014 all belong to the category of early angel investment.
Secondly, I look for and invest in these projects, and then grow with them, and the sense of satisfaction is different. In addition, if I invest in some late-stage projects, others have already seen them, and I don’t think the sense of achievement is that strong. For the 58.com, 4399, and OK Exchange mentioned earlier, the sense of achievement brought by early-stage investment is different.
In recent years, I have seen that the projects I invested in early are growing, and I am willing to continue investing in projects that surpass my previous investments. The sense of accomplishment at this stage is different from that of early investments. Last year, I resigned from the position of chairman of Meitu because I was afraid that there would be conflicts with investment projects. I wanted to focus more on various investment and entrepreneurial projects.
MetaEra: In your past experiences, you have always been able to successfully grasp the trends of emerging industries. Can you share how you have foreseen and grasped future development trends time and time again?
Cai Wensheng: I think my insight is OK, because if you succeed once, it can be attributed to your luck. People will always encounter a few opportunities in their lives. But I think from my experience of nearly 20 to 30 years from Web1 to Web2 and then to Web3, I have always been able to follow the opportunities, which is still related to my insight.
Why can I do this? Because I didn’t go to college formally, I only studied up to the first year of high school, which made me think without rules and regulations. When I came across some new industries, I was willing to try and take risks.
When I first entered the industry, I encountered many obstacles and even some things I didn’t understand. For example, when I registered domain names around 2000, no one registered a domain name for 60 yuan, but domain names were difficult to sell at that time. Later, we learned that some good domain names can be sold for tens of thousands, hundreds of thousands or even millions.
My first entrepreneurial project was 265 Navigation, a website navigation project. Later, I sold this website to Google. At that time, I also seized a field that people were not optimistic about. Later, I started a business to create Meitu Xiuxiu. People also thought that it was meaningless for me to do such a thing. Choosing Meitu Xiuxiu was just to help people Photoshop photos beautifully. In fact, this is a misunderstanding. At the beginning, Meitu Xiuxiu was indeed just for photo editing, but now Meitu Xiuxiu has dozens of functions, and various functions have been extended.
When I invested in OK Exchange in 2014, I didn’t know much about Bitcoin. I just thought it was a new thing and I was willing to try new things. But I would not blindly invest in a wide range of projects, because most projects will not succeed. The most important thing is to choose a direction and see if this direction can be developed in the next ten years.
Another most important point is that I think everyone should not set limits for themselves, because sometimes the more we know, the more we will cling to our previous successful experiences and cognitions, which are not easy to change.
MetaEra: What is your personal opinion on Bitcoin investment? What role does Bitcoin play in your investment portfolio, and how does it fit into your long-term investment strategy for the Web 3.0 ecosystem?
Cai Wensheng: Here we need to talk about what Web3 is. Web3 is different from Web1 and Web2, which is the so-called third generation of the Internet. Its core feature is decentralization. Blockchain is a representative of decentralized technology, and Bitcoin is an application of blockchain, but Bitcoin is not all of Web3.
Web3 will have various trends and combinations in the future, but the core essence is still decentralization. Blockchain happens to be a very important basic support, and Bitcoin is a typical representative of blockchain. Many people enter Web3 through Bitcoin, so Bitcoin will occupy a very important position in many people's investment portfolios. But I personally think that in the future, in the entire Web3 ecosystem, Bitcoin will only be one of the assets. Ethereum, which we see now, has also become an asset, and there may be more new recognized assets in the future. As a leader, Bitcoin will always have great value.
It was the same when I first entered Web3. I bought Bitcoin. But from my personal perspective, if I want to make some long-term investment strategies in the future, I have to jump out of Bitcoin. Not everything is related to Bitcoin. As I said before, before 2019, I always valued Bitcoin the most; after 2019, I valued the Ethereum ecosystem more. Of course, these two assets have proven their success. As for whether there will be a third ecosystem, I think it is already in its infancy. For example, the Solana ecosystem, with the popularity of MEME, people will think that the Solana ecosystem is worthy of attention. Of course, it has only improved, and it cannot prove that it is the future. So my current view is that Bitcoin and Ethereum have proven that they are viable and valuable, and the others have begun to sprout and develop, and we must pay attention to them.
MetaEra: Can you tell us the ratio of traditional investments to crypto assets in your current investment portfolio?
Cai Wensheng: In 2019, I only invested 10% of my funds in crypto assets, and the remaining 90% was still in traditional asset allocation. Although traditional assets have returns, crypto assets have higher returns. Today, the value of crypto assets and traditional assets are 50% each. Looking back, if I had invested 30% in crypto assets at that time, its current value would far exceed the value of my traditional assets.
I think the previous investment in crypto assets was indeed an attempt, but I think it is becoming increasingly clear now that Web3 and cryptocurrency are the future, and investment will continue to increase.
MetaEra: If there are entrepreneurs in the Web 3.0 field seeking your investment, which types of projects or people would you prefer? In other words, which tracks in the industry are you particularly optimistic about?
Cai Wensheng: When I first started looking for investment targets, I looked more at the projects. As I invested more and more, I looked more at the people. I also went through this process. In the early days, I would tend to focus on the track, but later I found that the projects I invested in, the PPTs that were initially shown to me and the actual results of the final execution were two different things. So I think people are more important. If a person is really capable, he will continue to change and eventually get things done.
As for the industry track, I think it must be a direction that can be developed in the future, because the harder you work, the further you can go. For now, I am interested in all Web3 projects. Another major track is AI. Both are very important tracks. I think AI and Web3 may be closely integrated in the future.
Back to the Web3 track, I think we can refer to the development of Web1 at that time. We all know that the earliest developed were portal websites such as Yahoo, Sina, and Sohu. Later, vertical channels such as automobiles and real estate appeared, and later there were chat tools and social networks. But I found that the earliest track to make money was games. The legendary game was the first game to go public on NASDAQ and make a lot of money. So in the current Web3 field, I personally will investigate the game track. On the one hand, games can make money quickly in a short period of time. On the other hand, Web3 games are a channel that can attract new users.
Although Web3 games like Axie and STEPN three years ago pioneered the idea of making money by playing games, they did not continue to operate in the end. This is related to their economic model. If the game blindly rewards, or rewards too much at the beginning to attract users, these are not sustainable. But it does not mean that this road is not feasible. In traditional games, less than 10% of people spend money, and the other 90% of people play with them. If there is a good economic model in the future, these people can make money. This is the core of Web3. So games such as Axie and STEPN have made a good start and made attempts. Although they are not very successful, I think we will definitely see better cases in the next few years. Whoever has a good economic model will stand out.
MetaEra: Web 3.0 is undoubtedly an industry full of opportunities. As a self-made entrepreneur who has experienced hardships, what do you think of the phenomenon of getting rich overnight in Web 3.0 and the dream of getting rich quickly it creates? What do you think of this magical wealth-making effect?
Cai Wensheng: This is why cryptocurrency has always been so controversial. If you look at Web1, Web2 and mobile Internet, there is no controversy and everyone will accept it. Because Web1 and Web2 require your own efforts to slowly accumulate your users and then build your business model. It takes time to accumulate before you can finally succeed.
But the initial product form of Web3 is related to finance. Whether it is Bitcoin or Ethereum, including other projects that need to raise funds, there will indeed be opportunities to get rich overnight after the issuance of coins, but there is no way to sustain it. Because I have seen countless people who have made a lot of money through speculation in coins or contracts, because they made money too quickly, they would eventually lose it too quickly. I have hardly seen anyone who has made a lot of money through contract speculation in coins and can continue to make it to the present. Of course, there may still be a few people now, but I don’t know if they can make it to the end.
For individual participants, I think if you want to achieve great success, you still have to truly participate in project construction. This is not just about pursuing financial returns. At the same time, entering through the DAO method will give you a different sense of participation and achievement.
We know the Bitcoin halving cycle. From the previous two cycles, many people have made money, but in the end, most of them still return to zero. In this Bitcoin halving cycle, you will find that this effect has become shorter and shorter. There may be tens of thousands of MEME coins on Solana in a day, but there are too few coins that can actually come out. Second, the wealth effect is too short, and huge market fluctuations may only last for a few hours, or even just a few tens of minutes.
So for Web3 practitioners, cryptocurrency trading is just one part of it. It may have certain benefits. It will form a network effect and attract everyone to participate. But if you want to succeed through cryptocurrency trading, I think it is very difficult. In the end, you still have to participate in the construction of the project. Even if you are not the founder, you are the builder of the project or have a deep understanding of the project, you will get the final big reward.
MetaEra: With Hong Kong opening up to Bitcoin spot ETFs, how will this new development affect the strategic layout of (Hong Kong-listed companies) in the field of digital currency?
Cai Wensheng: Cryptocurrency has been increasingly recognized. Hong Kong has always been a financial center and is open to the outside world. We can also see that the Hong Kong government's vigorous promotion of the development of web3 should be supported by Chinese policies. On October 31, 2022, the Hong Kong Special Administrative Region issued the "Policy Declaration on the Development of Virtual Assets in Hong Kong", and then quickly opened exchanges and spot ETFs, making Hong Kong the center of Web3 again. We can also see that Meitu is the first listed company in Hong Kong to purchase cryptocurrency, and later we also saw that Boyaa Interactive, Blueport and other listed companies are also following suit. I believe that more and more listed companies will use cryptocurrency as company asset allocation. I think Hong Kong's current overall policy is even ahead of the United States in some areas. In the future, Hong Kong will have great opportunities in AI data, innovative finance, trade settlement, entrepreneurship and innovation technology, and other aspects!
MetaEra: How do you evaluate the development prospects of the combination of Web 3.0 and AI? Which one is more important?
Cai Wensheng: I am now focusing on Web3 and AI. The two are not in conflict, and perhaps they will complement each other. A good example is Sam Altman, the founder of Open AI. He is a staunch supporter of Web3. He now has two entrepreneurial projects, one is ChatGPT and the other is WorldCoin. Earlier this year, the market value of WorldCoin had reached 100 billion US dollars, the same market value as Open AI, which was founded in 2017, and WorldCoin took just over a year. This shows that the systems of Web3 and AI are inseparable, and the two represent two directions. AI represents more of an improvement in production efficiency, while Web3 represents an improvement in production relations. The combination of the two will generate greater value. It is difficult to say which one is more important. I think both are equally important.
MetaEra: Currently, Hong Kong, Singapore, and Dubai are all competing for the position of Asia's digital financial center. Which one do you think has a greater chance? How will the Web in mainland China develop? Will digital currency trading be allowed in the future?
Cai Wensheng: I have a deep understanding of all three places. I now spend more time in Hong Kong, so I must be more optimistic about Hong Kong. As far as I know, Binance’s first overseas subsidiary is in Hong Kong, and FTX’s startup is also in Hong Kong. Tether, the largest issuer of stablecoins, was also first established in Hong Kong. It should be said that Hong Kong is the earliest birthplace and cradle of cryptocurrency. Due to the epidemic in the past few years and the unclear policy of the Hong Kong government on Web3, many people and projects engaged in Web3 have been forced to flow to Singapore and Dubai. But with the release of the "Policy Declaration on the Development of Virtual Assets in Hong Kong" in October 2022, this aspect has become very open.
These three places all have their own advantages. In terms of policy, Dubai is the most open, but it has natural defects. The first is that the environment and climate are not suitable, and the second is that basic resources and technical talents are scarce. Singapore has attracted a large number of developers and financial managers from the stability of its policies. However, Hong Kong combines all the advantages. Its policies are more open, it is close to the mainland, it has sufficient basic resources and talents, and it has the support of the original traditional financial center. I am very optimistic about Hong Kong's successful experience, and it may even be conveyed to mainland China in the future. Not long ago, I saw that the retired deputy governor of the People's Bank of China once proposed that China should reconsider the development of cryptocurrency. Although it does not represent the official statement, I think it already represents a trend. Mainland China is already rethinking the development of Web3 and cryptocurrency. This is not achieved overnight. I think China will definitely embrace Web3 in the next few years and even reopen digital currency transactions.
MetaEra: What advice or guidance can you share with young entrepreneurs who are interested in the Web 3.0 field?
Cai Wensheng: I want to emphasize this point. Web3 is a huge opportunity. Blockchain technology is decentralized, and its presentation is cryptocurrency, so it is not wrong for everyone to enter the Web3 industry from cryptocurrency. But don't just focus on cryptocurrency. The entire Web3 has huge opportunities and space, and many fields can be involved.
First, even if you are only targeting cryptocurrency, don’t just speculate on it or trade it. You can build all kinds of things in it. If you can look at it this way, you will have a lot of room to play.
Second, for an entrepreneur, you must recognize your own strengths. Whether you think you are more focused on technology, finance, or management, you must combine your own strengths. It is best to have the ability to start your own business, but if you don’t have the resources, you can join a team to create together.
Third, from the perspective of Web1 and Web2, true success really requires time to accumulate. When you invest in the Web3 field, you also need time to accumulate. Of course, it may take shorter time than Web1 and Web2, not five or eight years, but it also takes time to achieve. It is actually very difficult to get rich overnight. You may get it quickly but also lose it quickly.
Fourthly, China is not open to cryptocurrencies yet. I think those who have the conditions should go overseas to develop. If one day there is a foundation and China has an open policy, we will return to the mainland to develop and build. Going overseas will be a factor that must be considered when investing in the Web3 field. Combined with the characteristics of Web3, my understanding is that the future Web3 may not distinguish between domestic and overseas, nor between countries. This is also the direction of all practitioners' efforts, hoping to connect the whole world through Web3. In addition, the ultimate goal of cryptocurrency may be to eliminate existing national currencies. Although this will take a long time, this is also the charm of Web3 and its long-term direction.
