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Spinning and measuring out Web 3
Such an accounting manual is much needed by merchants. I have put it together in such a way that, whenever necessary, everything essential to understand accounts and bookkeeping may be readily found.
-Fra Luca Pacioli1, Particularis de Computis et Scripturis (1494)
Today we announce the seed funding of Spindl: the first real way to do measurement and attribution in Web 3.
The $7M investment was led by Ani Pai of Dragonfly and Jeff Morris Jr. of Chapter One, with major additional investment by Kyle Samani at Multicoin Capital, Polygon Ventures, and Solana Ventures. Additionally, investors Arjun Sethi at Tribe Capital, Fabrice Grinda from FJ Labs, Furqan Rydhan from Founders, Inc, Eric Seufert from Heracles Capital, Junaid Hussain from HodlCo also participated.
Angel investors Balaji Srinivasan, Anthony ‘Pomp’ Pompliano, Dan Romero, Ryan Selkis and a few others rounded out the raise.
So what are we building?
Spindl was conceived by asking two questions:
What piece of absolutely critical Web 2 infrastructure could and should be rebuilt along blockchain lines?
What absolutely critical infrastructure is missing from Web 3?
The answer to both questions is the same: attribution.
Attribution is the accounting layer of the entire user-acquisition stack: social media, organic community building, referral programs or (gasp!) even ads, they’re all just inputs to attribution. It's much more than just bean-counting, though the bean-counting is important. It’s the capital ‘T’ Truth that the entire ecosystem depends on.
Take the universe of Web 2 advertising, responsible for trillions in market cap and billions in revenue: it’s a wholly trustless world where parties must come to a unanimous consensus about who or what drove which marketing result, with lots at stake in the conclusion.
Web 2 is stale and legacy and beyond reform at this point; the existing players are fighting for the scraps left over by Apple and Google dominance. Web 3 is the future, but what's striking about the future is how nothing even resembling proper attribution exists.
Different standards abound of course: Google will try to convince your their 'last click' model is correct, while Facebook will force you to use their 'self-attributing' model instead. Ultimately mutually suspicious parties come to a consensus on what transpired, until the next set of transactions...exactly like a blockchain.
Web 2 is stale and legacy and beyond reform at this point; the existing ad tech players are fighting for the scraps left over by Apple and Google dominance. Web 3 is the future, but what's striking about the future is how nothing even resembling proper attribution exists.
What's a lending protocol like Aave’s ARPU, or average revenue per user, a basic monetization metric?
What's a game like Sandbox's user retention rate by cohort, another basic metric?
Did that NFT or token drop, like the one Optimism did, work and did it actually drive long-term engagement with the protocol?
When 'token go up' is a law of nature and projects drive growth on speculative interest, then acquisition costs are free and the questions above are irrelevant. But when that's no longer true, suddenly Web 3 needs to abide by the longer-lived law of 'you must have sustainable unit economics when it comes to user acquisition’ and those questions are crucial. Without Spindl (or something like it), Web 3 won't succeed at scale.
Web 3 as inverted Web 2
The 'funnel' is the organizing marketing metaphor which holds as true for highway billboards as NFT drops. At the top of the funnel we have experiences like Discord posts, tweets, Instagram ads, YouTube videos, and every first-touch media experience for a potential user. At the bottom of the ever-narrowing funnel we have the events we care about: NFT buys, providing liquidity, engaging with a game.
In Web 2, most of the complexity lives toward the top of the funnel: ranking algorithms, ad auctions, user targeting, delivery optimization...all very complicated ways to massage the initial experience to drive the eventual down-funnel result. Attribution itself is relatively elementary: you bought a $200 thing on an ecommerce site, or $10 thing inside a mobile game. Just tally the monetization events and call it a day.
Attribution in Web 3 is much more complicated.
Sure, the data is 'public' in that it's probably on chain (though most of the relevant metadata is not). But teasing out which function on what smart contract called by which address corresponds to the in-game action that's the core of a certain experience, that's less easy. Also, disentangling the correct acquisition cost or monetization for a given wallet, given the novel and convoluted economics at play in many crypto projects, is still the murky territory of custom dashboards.
(Consider for example the liquidity bonus equation for Dydx, which resembles the financial derivatives modeled on Wall Street trading desks.)
We're not summing the prices in your online shopping cart anymore. Matters have gotten complicated.
Never mind that the data infrastructure in blockchain is embryonic and hard to use. While you could--and some have--hack together basic versions of Web 2 style attribution if you had to, best of luck if you're rolling your own in Web 3. If Spindl succeeds, you won't have to.
In the fullness of time, Spindl will evolve toward a fully-decentralized attribution protocol, a form of public utility not uniquely owned and controlled by anyone. For now, we just want Web 3 developers to know what every Web 2 developer already does.
But why a spindle?
The symbolism of the spindle—a manual device used to spin loose wool into yarn—comes from Greek mythology. The ancient Greeks represented destiny as three Fates—Clotho, Lachesis, and Atropos—who spun the thread of human life into a thread, and then cut it to everyone’s apportioned time on Earth. The Greek word for the Fates, the moirai, comes from moira, meaning one’s due share or bounty. Much like the moirai, an attribution system spins the chaos of Internet data into a coherent thread, and then snips off the correct bounty for whoever owns that particular length of yarn.
My Twitter poll about ‘Moira’ as a company name utterly flopped however, so we chose the spindle (pictured in Clotho’s hand above) as the company’s icon. We dropped the ‘e’ because we were too cheap to buy spindle.xyz, so now we sound like a German metal band (Spïndl!). We like the name, and plan on keeping our Web 3 attribution spindle spinning as fast as we can.
Want to know more about our plans?
Read this post and then that post; altogether, they’re the pitch we raised the round on in essay form.
Want to help us build the Web 3 growth machine? We’re hiring!
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Fra Luca Pacioli was Venetian mathematician and Franciscan friar who invented double-entry bookkeeping, accelerating 15th-century Italian banking and changing finance forever.