Facebook's decade-long missteps should serve as lessons for the Web3 era
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Facebook's decade-long missteps should serve as lessons for the Web3 era
Web3 platforms will resemble nation-states, meaning they must adhere to free trade agreements and manage the data and assets flowing between them.
Navigating Web3 tides with focused insightsAuthor: Sam Lessin, Partner at Slow Ventures
Translation: Noodle, TechFlow
A long time ago—back in 2011—Facebook launched the "Open Graph," which allowed users to carry their Facebook identity across different apps, enabling developers to deliver personalized experiences anywhere. Instead of recreating an identity every time you entered a new application, you could use the identity you'd already built on Facebook, theoretically leveraging the collective identity established by Open Graph developers on the platform.
Replace "Facebook account" with "crypto wallet," and Web3's goal looks strikingly similar. Both Open Graph and decentralized networks aim to solve the same deep gaps around identity and memory in the original vision of the internet. Both seek portable identities across digital ecosystems—including data, assets, and relationships. And despite how hard it might be to believe given today’s context, even the idea of personal data sovereignty—so central to the crypto world—was part of Open Graph’s original vision.
Despite its ambition, Facebook’s effort with Open Graph ultimately failed. There were several reasons—some predictable, others more subtle—but none stemmed primarily from the fact that Facebook is a centralized entity. That doesn’t mean the difference between a single company offering cross-platform services versus a decentralized, blockchain-based approach isn’t important; only that it wasn’t decisive. A new generation of Web3 technologists can still learn a great deal from the failures of Facebook’s Open Graph.
Decentralization alone won't create a truly open network if the information shared between applications isn’t useful—or if the open economy doesn’t make sense.
1) Building compelling cross-app social experiences is far harder than it seems
During the Open Graph era, there was a belief that all apps would get better because they’d become “social.” The problem? Most developers couldn’t figure out how to make this vision real. Sure, knowing what your friends are reading, watching, or listening to was occasionally helpful. But the core argument—that developers could build better apps by leveraging Open Graph and making them social—was never convincingly proven.
How does this apply to Web3? I think finding compelling use cases will be challenging. Decentralized finance (DeFi) is a clear and specific use case that makes sense for cryptocurrency. You hold a wallet containing all your assets, through which you access many different services and use various products to buy and trade tokens.
But when we move beyond financial use cases, real questions emerge about what will actually be compelling. The idea of NFT communities like CryptoPunks moving across worlds sounds cool in theory—but will it work well in practice? The vision of owning digital skins, tools, and resources that you can carry from one world to another is enticing, but it remains highly unclear how these assets will retain value and utility across different environments. I’m optimistic answers can be found, but it would be wrong to assume they’re obvious. All of this feels like a heavy lift.
2) Strong incentives exist to read from the Open Graph, but few to write back to it
The key idea behind Facebook’s original vision was solving the cold-start problem for new apps. If people could bring their friends, preferences, and data into new applications via the Open Graph, those apps could provide better user experiences. They would then write new behavioral data back to the graph, which other apps could use to further improve experiences—creating a virtuous cycle toward a deeply personalized web.
The benefits of reading from the Open Graph were fairly clear: any incremental improvement in user experience was worth pursuing, as was tapping into Facebook’s vast network effects for growth.
But logically, developers never had sufficient incentive to write data back to the graph. The system’s core information economics didn’t support it. If you built insights about users’ preferences, interests, or relationships, you could use them to improve your own product—so why share that data with Facebook, let alone enable competitors to use it to enhance rival applications? It simply didn’t add up.
For a while, Facebook tried to compensate by offering free access to movies users liked in exchange for sharing activity on Facebook, or promoting other apps in News Feed to help them acquire users. But eventually, this arrangement proved unsustainable—a form of subsidized information economics that never fully worked.
What do these information economics challenges mean for Web3? First, while platforms and metaverses will have strong reasons to import certain external data—like communities—it’s unclear whether they’ll want users importing *all* their data. Many immersive games have long relied financially on selling in-game assets, so allowing players to freely import items from unrelated games without monetizing that flow seems implausible.
Moreover, once you purchase an asset within a game, there’s no guarantee you can take it with you when you leave. In the short term, yes—if you mint an NFT in one game that’s useful in others, that asset may be more valuable to players and drive further minting. But long-term viability depends on other games accepting those items—as we’ve discussed, that seems problematic.
Web3 may face the same information economics issues as Open Graph—but in reverse. Platforms and metaverses may be more willing to let users *export* assets, but less inclined to allow arbitrary imports, thus hindering the digital asset supply chain.
Ultimately, Web3 platforms may resemble nation-states, meaning they’ll need to negotiate free-trade-style agreements governing the flow of data and assets between them. Part of Web3’s dream is creating systems capable of enforcing their own rules. But history shows that free trade is a delicate, difficult balance—especially without a hegemon like the U.S. or U.K. to oversee it.
3) User trust is hard to maintain
One core reality of building internet-scale products is that the average user IQ is 100—i.e., average. Yet within that user base, there’s enormous variation in age, temperament, and digital literacy.
Meta-platforms and applications face a major trust challenge. At least in my view, this stems largely from the fact that issues around identity, data, and portability are inherently complex for ordinary people. No matter how simple you make the interface or transparent the rules, most users still struggle to understand how data moves across the internet.
Crypto’s core ethos should address this by giving users clear access to their data and true sovereignty. I hope it works—and scales in a way billions can trust—but it will be challenging, because the fundamental user difficulty remains: understanding how identity and data portability work in digital spaces is complex, and sometimes surprising.
If anything, one of Facebook’s biggest mistakes over the years—including with Open Graph—was taking a paternalistic stance, bending over backward to protect users. In doing so, I worry product teams issued promises they couldn’t keep.
Crypto takes the opposite approach—radical laissez-faire based strictly on rules—which aligns with my beliefs about building sustainable, healthy platforms. But at the same time, I think we must acknowledge that even an open platform with these characteristics will be used in unintended ways. Users will experience surprises—and negative ones. People will be harmed or shocked by data about them circulating on blockchains.
Hardcore crypto advocates reject this framing, arguing that zk-snarks (zero-knowledge succinct non-interactive arguments of knowledge—a method to prove you know something without revealing it) and next-gen privacy technologies will solve everything. These tools may help in certain Web3 domains, though they come with their own challenges. But it’s unrealistic to believe that, across the broad landscape of technology, the Web3 world won’t face similar trust issues with average users.
Turning Point: What About Decentralization?
This brings us to the trillion-dollar question: Is decentralization really the secret weapon that allows Web3 to succeed where Open Graph failed?
The case for decentralization lies in the internet itself. First, the birth of the internet required widespread agreement on protocols and participation rules. Second, the fledgling internet had to withstand repeated attacks from powerful companies like AOL and Apple, which poured massive resources into absorbing and eliminating it. Third, governments sought to restrict its spread in hopes of controlling domestic information spaces.
Yet the internet survived—for two reasons. First, its open framework enabled innovation and growth at a speed unmatched by any other priority. Closed systems might offer higher quality or greater security, but they simply weren’t fast enough. Second, the internet succeeded because the U.S. and other major powers chose, at critical moments, to defend it out of a firm belief in free speech and democracy. If Web3 (essentially internet 2.0) succeeds, it will be because it follows a newly refined—but fundamentally similar—path.
If Web3 fails, it won’t be because decentralization doesn’t matter—it will be because it fails to solve any of the core user-facing challenges of open network platforms. Consumers don’t understand or care about decentralization and data sovereignty. Only technologists love these things. Average users care about functionality and experience. If closed systems deliver better functionality and experience than open platforms, we’ll end up with a series of isolated, immersive digital experiences—basically just like today’s app world.
I believe Web3 will succeed. First, it’s the future I personally want to see. But if we want Web3 to succeed, we must learn from earlier attempts like it—and understand the real problems standing in our way.
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