In crypto there’s a constant chicken and egg debate of apps versus infrastructure. Which is more important? Which accrues more value? As an entrepreneur, which should I build?
For me, this 2018 article effectively settles the debate: https://www.usv.com/writing/2018/10/the-myth-of-the-infrastructure-phase/
The answer: It depends what part of the cycle we’re in.
But when you look at the history of general technologies, the killer app comes first. The infrastructure follows.
For example, light bulbs (the app) were invented before there was an electric grid (the infrastructure). You don’t need the electric grid to have light bulbs. But to have the broad consumer adoption of light bulbs, you do need the electric grid, so the breakout app that is the light bulb came first in 1879, and then was followed by the electric grid starting 1882. (The USV team book club is now reading The Last Days Of Night about the invention of the light bulb).
You could say a series of technological breakthroughs (eg, the right filaments, the right glass container) enabled the first “killer app” (💡💡💡) which then incentivized the infra.
Another example:
Planes (the app) were invented before there were airports (the infrastructure). You don’t need airports to have planes. But to have the broad consumer adoption of planes, you do need airports, so the breakout app that is an airplane came first in 1903, and inspired a phase where people built airlines in 1919, airports in 1928 and air traffic control in 1930 only after there were planes
Same pattern here: a series of new technologies (lightweight engines, proper control mechanisms) enabled the first “killer app” (🛫🛫🛫) which then incentivized the infra.
Crypto’s first killer app is right under our noses: Bitcoin itself.
The killer app was Bitcoin! And what it represents: a sovereign store of value tied to an uncensorable payment network.
Satoshi’s technology breakthrough enabled the killer app (Bitcoin) which has now enabled more than a decade of crypto infrastructure buildout, from alternative Layer 1s to smart contracts to new blockchain primitives.
In generative AI, I think a similar pattern is also unfolding:
ChatGPT was the first AI killer app. The lightbulb moment. 100M+ users within months of launch and one of the fastest growing consumer apps of all time.
ChatGPT opened investors eyes’, blew users’ minds, and now everyone from Google to Softbank to the CCP are spending billions ($7 trillion??) to build and buy AI infrastructure.
And steadily and surely, much of this infrastructure investment and innovation will make AI better, faster, and cheaper. Then more killer apps will be built atop all the GPUs, foundation models, and SDKs. Which then begets more infra. And the cycle continues.