The Mishcon Academy Digital Sessions. Conversations on the legal topics affecting businesses and individuals today.
Sian Rodway, COO
MDRxTech
In this episode, we’re talking about Web3 or Web 3.0. We’ll explore the evolution of the internet, try and cover a few buzz words such as blockchain, NFTs and the Metaverse and talk through the key things that a forward-thinking organisation should think about when formulating their Web3 strategy and pursuing valuable and impactful projects.
Hello and welcome to this Mishcon Academy Digital Sessions podcast. I’m Sian Rodway, COO of MDRxTech, the Mishcon Group’s technology consultancy. We partner with clients to build strategies and software products that harness the latest technologies whilst taking care of the legals. I lead the development and delivery across our consulting services and I am dedicated to coaching leaders who want to unlock the power of technology in their businesses. I’m joined by our CEO, Tom Grogan, who has worked with clients globally on their Web3 projects. He chairs the blockchain chapter of Tech London Advocates, has lectured at UCL and Cambridge University, mentored a number of early stage businesses and is on the board of the Institute of Digital Fashion. In short, we are in safe hands as we try to navigate Web 3.0.
Lovely to have you Tom, welcome to the podcast. I’m going to start with a really simple question, what is Web3?
Tom Grogan, CEO
MDRxTech
So, Web3 has meant a number of things over the last ten years but always, it returns to this next vision for what the internet might be. The proponents of Web3 most recently, have argued that it will be characterised by principles such as decentralisation, often underpinned by distributed ledgers such as blockchain and a token economy, i.e. the ability to transact value, whether or not that is a currency or an asset directly between people. If we briefly contrast it with Web1 and Web 2, so Web1 is very much the beginnings of the internet, it’s the internet of reading, the internet used to basically just be a mass catalogue of websites that you could go on and read stuff. Web2, very much the era of the internet that has seen the explosion of the likes of the social media giants and e-commerce is the internet of reading and creating, so whether or not that is creating your social media profile or interacting with posts with likes or if anyone remembers pokes on Facebook, all of these more interactive experiences that have sort of characterised the Web2 of today. Web3 is the next step of that where, as I say, we hope that we’ll be able to transact value directly, so it will become the internet of read, create and own.
Sian Rodway, COO
MDRxTech
And why is now the moment for Web3?
Tom Grogan, CEO
MDRxTech
Mainly powered by technological developments. So, fundamentally, blockchains are a computer science breakthrough. They are quite remarkable. They allow users to send and receive value directly, with nothing other than a device, be that a computer or a mobile phone and an internet connection. That’s worth pausing on. Public blockchains in particular, so bitcoin being the most famous example, unlike every other tool and mechanism for sending value over the internet, enable us to send and receive value without needing to trust any middleman or intermediary. And the absence of that middleman make public blockchains the world’s only public infrastructure for transacting digital value and by public, I mean open to anyone with an internet connection and not owned by an single entity.
Sian Rodway, COO
MDRxTech
So we already heard you talk about blockchain technologies and often people speak about Web3 in the same breath as NFTs and the Metaverse so, I’m wondering if we can just unpick that relationship. How do NFTs fit into conversations about Web3?
Tom Grogan, CEO
MDRxTech
So, NFT stands for non-fungible token so, in this Web3 reality where people are able to transact value, value is represented in the form of tokens. All an NFT is, is a non-fungible token. Non-fungible meaning it’s not readily exchanged for others having the exact same value, so the classic example there is if you, Sian, lend me £10, you are probably relaxed as to whether or not I pay you back with a £10 note, two £5 notes or ten £1 coins because ultimately, they are fungible with each other, they are readily exchanged. If you were to lend me a piece of artwork, you probably wouldn’t be happy for me to give you back another artwork that I tell you has an equivalent value because you probably attach meaning to that unique asset. So, NFTs are important if Web3, as we currently imagine it, is to become a reality because it allows us to not just transact fungible things, i.e. money but non-fungible things, unique goods, artwork and others.
Sian Rodway, COO
MDRxTech
And what about the Metaverse?
Tom Grogan, CEO
MDRxTech
So, the Metaverse is really interesting and evokes some very clear imagery when we, when we talk about it and we’re going to do another session on that soon. Suffice to say, I always encourage people when they think about the Metaverse to not think of it as a place, it sort of evokes these slightly dystopian, depressing views of a Ready Player One matrix environment that frankly often just looks like a pale imitation of the real thing. The Metaverse, to me and to us here within MDRxTech, is more of a movement, it’s a movement towards breaking down the walls between the physical and digital. Again, to give an example, today if you want to go and buy a t-shirt, you either go in store or you shop online. All the Metaverse is, is a breaking down of those two realities, whether or not that’s because your online experience feels more physical or your physical experience feels more digital, that is the Metaverse. Metaverse, to be very clear, is absolutely inevitable, it’s going to happen, it’s already happening, it’s going to impact every aspect of our lives. Whether or not it’s going to be underpinned by Web3, we still don’t know. Many of us hope it does because having a public infrastructure for value, I think is invaluable but it’s not a done deal and we don’t know whether or not the Metaverse will be underpinned by Web3 in the future.
Sian Rodway, COO
MDRxTech
And that brings into question an interesting point about whether or not we’re talking about Web3 in a future tense or the present tense, so when we’re talking to clients often now, we’re talking about it in the present tense. Is it a mistake if businesses are thinking about Web3 in the future tense only?
Tom Grogan, CEO
MDRxTech
Yeah, I definitely think it is, there was a graph doing the rounds a while ago and it was a graph, so it must have been true, that tracked the adoption of crypto, which ultimately is an underpinning of Web3 with the adoption of the internet and it showed two things very clearly, it showed firstly that the relationship was so close, so tight, so well aligned that it was quite startling. The second thing it showed us was that we’re in like 1997. I’m not sure if you tried to use the internet in 1997, it was rubbish, it was really quite painful to use, you couldn’t really do much in the way of ecommerce, the legal and regulatory frameworks weren’t well developed, the user experience was terrible, it was slow. One, doesn’t mean that if you were a large retailer in 1997 you shouldn’t have a website, that was still an important thing to do, and two, the biggest companies in the world today were founded either in ’97 or before ’97, so that they could hit the ground running when the sort of ecommerce revolution took off.
Sian Rodway, COO
MDRxTech
And based on that, how should a business assess how urgently they should consider the impact of Web3 on their business?
Tom Grogan, CEO
MDRxTech
I think responsible businesses should certainly be thinking about it and engaging with it and for us it always comes down to the why. If you or part of your business are doing things and you’re not sure why, please stop. Please stop doing random things and if your reason for launching an NFT is to appear innovative, you’re like three years too late so, please always return to the why. What are we, as an organisation today? What would we like to be as an organisation in ten years? And then figure out how, if at all, Web3 forms a part of that and we’ll have another session to talk about the Metaverse because I think every business will be impacted by the Metaverse but many businesses will be impacted by Web3 as well. Always return to the why. The other big recommendation we make, is to make sure that whatever you do, make sure that it is inching you organisationally further towards that target end state goal. We always use Disney as a bit of a pin-up example of how to do this really, really well. They dipped their toe in the water into Web3, launched their Golden Moments collection, which was a series of relatively simple NFTs that were little gold statuettes of famous Disney characters in iconic moments and that was interesting and valuable and some people bought it and some people didn’t but importantly, they used it as an internal organisational learning tool that empowered them to know, as an organisation, what it meant to do Web3. They since have massively expanded their operations. They refer to the Metaverse, and it’s a lovely turn of phrase, as the next great frontier of storytelling. That began with their dipping of the toe into Web3, so it’s always trying to make sure that organisationally we’re inching the readiness forward.
Sian Rodway, COO
MDRxTech
And when you’re talking about starting with the why, I think it’s been something important within MDRxTech when we’ve been talking to clients about their business strategies, so sort of enterprise level strategies, that Web3 is a way in which they can achieve those, as opposed to a bolt-on to their strategy or a spike, something that they think about in addition to their business strategy. Do you think that that is what all businesses should be doing?
Tom Grogan, CEO
MDRxTech
Yeah, I think you have to return and say is it, is it complementary and symbiotic to your business? If it’s not, very, very good case to just not do it. I’m sure there will be exceptions to that rule that there are some industries, some businesses that suit blockchain solutions, Web3 solutions, natively, without having to reinvent their business model and I always think they’re the ones that are probably best suited to succeed. It’s fair to say, a lot of clients come to us asking for a blockchain solution and do not leave with one because the first question we always ask is does this need blockchain? Often, the answer is no, it does not because the same objectives can be achieved using alternative technologies that frankly are cheaper to implement, more scalable and easier and quicker to realise value from.
Sian Rodway, COO
MDRxTech
And you talked about Disney’s success by sort of dipping their toe in the Web3 water, as it were, how can organisations use experimentation to work out whether or not Web3 is right for them, something that they should be pursuing?
Tom Grogan, CEO
MDRxTech
So, again, starts with the strategy because if the strategy tells you need it then you should be doing it. I think what Disney did very well was also being open to fail or rather they defined success quite widely. Every project they launched, didn’t need to make them hundreds of millions of dollars but provided it was inching you in the direction of that target end stage as an organisation, that was a wine. Again, to draw the analogy that I’m always slightly nervous to draw between having a website, your website in 1997 didn’t have to make you loads and loads of money necessarily, frankly it probably didn’t, but it needed to help you organisationally understand what it meant to have a website, the team you needed to implement it, the sorts of users, customers that might engage with it so that in the future when you move forward and progress more aggressively in that space, perhaps you use a different website, maybe you burn the old one and start again but the lessons continue and the lessons will see you through.
Sian Rodway, COO
MDRxTech
And then turning our minds to thinking about compliance and the legalities of pursuing a Web3 strategy, what are the sort of key concerns that businesses need to be conscious of when pursuing Web3?
Tom Grogan, CEO
MDRxTech
The first thing is to think about the legals up front. I always say that our large clients, our sort of Blue Chip, FTSE 250 clients tend to come to us second and believe me, that’s something I’m trying to change, but they often come to us because they’ve done something and it’s sort of been okay until the very last minute when all of a sudden, their in-house legal team have realised what they’re doing and screamed. We talk about compliance by design underpinning everything that we do and so from the sort of ideation stage, the coming up with the concept, formulating the strategy, we make sure that we leverage the best lawyers across the Mishcon Group, to give us that comfort that we can proceed with confidence, innovate with confidence, without the legal and regulatory issues tripping us up at the last and we’re super, super lucky within Mishcon de Reya and Taylor Vinters that we have some really excellent Web3 specialist lawyers. Anne Rose, with whom I co-lead the Blockchain Group within Mishcon de Reya is helping to write the law with the Law Commission on what crypto assets are from a property law perspective. We have Rebecca Belgrave doing some amazing work on the contentious litigation side, we’ve got a best in class law firm to draw on and that I think sets us apart when it comes to building compliant by design.
Sian Rodway, COO
MDRxTech
It’s also something I’ve observed in terms of when businesses are executing their Web3 strategies, making sure that they also consider the transformation of those in-house functions, so whether it’s procurement or legal so that they understand these technologies, how much effort needs to be put into that versus the getting on with the technology and trying something else?
Tom Grogan, CEO
MDRxTech
I think it’s important to not make those competing. I think quite often we hear people say that innovation and compliance and organisational readiness are sort of a competing objective. I just don’t think that’s true actually, I think equipping your organisation and support functions, whether or not that’s your procurement team or your HR people team or you legal team to understand and engage with these technologies, actually makes you go faster, allows you to run faster, go harder, do better when it comes to innovation. So, I don’t think they’re necessarily competing, however, they are often overlooked and so, when we are doing strategies for particularly our larger clients with large in-house teams, we make sure that the training and the knowledge transfer takes place as well so that they can run at speed once they decide which way they want to run.
Sian Rodway, COO
MDRxTech
Thanks Tom and hopefully people have heard this and they’re feeling quite excited about Web3 now or realising that it’s something that they definitely need to bake into their strategy going forward. What should their next step be?
Tom Grogan, CEO
MDRxTech
Get in touch. We’re working with some of the world’s most innovative organisations across both public and private sectors to create impactful strategies and then begin to pursue some really, really valuable and well thought through implementation, so please do get in touch.
Sian Rodway, COO
MDRxTech
Well, it’s been great talking to you and hopefully, we’re going to hear from some of our listeners soon as we work with them on their Web3 projects. I’d like to say thank you, Tom for your time today, it’s been great hearing more about Web3, not just what MDRxTech is doing in this space but also what the opportunity is for businesses across different sectors.
I’m Sian Rodway and the Digital Sessions are a series of online events, videos and podcasts, all available at Mishcon.com. If you have any questions you would like answered or suggestions of what you’d like us to cover, do let us know at digitalsessions@mishcon.com.
The Mishcon Academy Digital Sessions. To access advice for businesses that is regularly updated, please visit Mishcon.com.