There is nothing wrong with entering the Web3 industry from cryptocurrency, but don't just focus on cryptocurrency. The entire Web3 has huge opportunities and space.

Article author: 0x9999in1

Article source: MetaEra

Recently, MetaEra Hong Kong launched a series of events titled "Hong Kong Cryptocurrency New Policy Second Anniversary Celebration", with an important part being "High end Dialogue: Hong Kong Web3.0 Influential Leaders". The person interviewed in this issue is the famous angel investor Cai Wensheng.



Cai Wensheng, who entered the domain name business early on, 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. Afterwards, he transformed into an angel investor and invested in many companies such as Storm Player, 58.com, Internet Express, Optimization Master, CNZZ Data Statistics, China Webmaster Station, Yiming China, OKEX, etc., becoming a well-known angel investor in China. At the same time, he created his own 4399 games and Meitu Xiuxiu company in Xiamen. For the upcoming Web3 era, Cai Wensheng believes that the core change of Web3 is that users can self control data, and their data can be monetized, becoming owners of 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 on all walks of life.

Essence viewpoint

Everyone should not set limits for themselves, but should be exposed to new things or assets.

● Web3 is different from Web1 and Web2, that is, the third generation Internet, and its core feature is decentralization.

At present, Hong Kong's overall policy is even ahead of the United States. In the future, there are great opportunities for Hong Kong to do AI data, financial innovation, trade settlement, entrepreneurship and technology, and other aspects!

AI represents the improvement of production efficiency, while Web3 represents the improvement of production relations. The combination of these two will generate greater value.

Hong Kong can be considered as the earliest birthplace and cradle of cryptocurrency.

From the perspective of Web1 and Web2, true success truly requires the accumulation of time. When you invest in the Web3 field, you also need to accumulate time.

Currently, mainland China is not open to cryptocurrencies. I think those who have the conditions should still go abroad and develop their careers.

Entering the Web3 industry from cryptocurrency is not wrong. Cryptocurrency is just the beginning of Web3, and the entire Web3 industry has huge opportunities and space.

Interview transcript

MetaEra: From early domain investment, stock market, Meitu, Bitcoin, to grassroots entrepreneurship, angel investment has 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: Among these labels, the one I am most satisfied with is angel investors. Because the earliest domain name investment was my personal behavior, I have also done it in the stock market system, and in addition, Meitu Company started its own business. But I have invested in over 100 projects, and entrepreneurship and investment are intertwined, so compared to entrepreneurship, I am more interested in the label of angel investors. The 4399 games, 58.com, and OK Exchange that I invested in for 14 years all belong to the category of early angel investments.

Secondly, I look for and invest in these projects, and then grow together with them, which brings a different sense of satisfaction. In addition, investing in some late stage projects, which others have already seen, I think this sense of achievement is not so strong. For platforms like 58.com, 4399, and OK Exchange mentioned earlier, the sense of achievement brought by early investment is different.

In recent years, I have seen that early-stage investment projects are growing, and I am willing to continue investing to surpass the projects I have invested in before. The sense of achievement in this stage is different from that brought by early investment. And I resigned from my position as chairman of Meitu Company last year because I was afraid of conflicts with investment projects at times. I wanted to focus more on various investment and entrepreneurial projects.

MetaEra: In your past experiences, you have always been able to successfully grasp emerging industry trends. Can you share how you have repeatedly foreseen and grasped future development trends?

Cai Wensheng: I think my insight is still good, because if you succeed once, it can be attributed to your luck. People will always encounter a few trends in their lives. But I personally feel that from the experience of Web1 to Web2 and then to Web3 in the past two to three decades, I have been able to keep up with trends and opportunities, which is still related to my insight.

Why can I do this? Because I have never attended a formal university, I only studied until my first year of high school, which makes me have no rigid thinking. When I encounter new industries, I am willing to try and take risks.

When I first entered the industry, I also encountered many obstacles and even some areas that I didn't understand. For example, when I registered a domain name around 2000, no one registered a 60 yuan domain name, but it was difficult to sell domain names at that time. Later, we learned that some good domain names could be sold for tens of thousands, hundreds of thousands, or even millions.

My first entrepreneurial project was 265 Navigation, which was a website navigation project. Later, I sold this website to Google, which also captured the area that people were not optimistic about. Later on, when I started my own business and became a Meitu Xiuxiu, people would think that it was meaningless for me to do such a thing. Choosing Meitu Xiuxiu was just to help people improve their appearance, which was actually a misunderstanding. At the beginning, Meitu Xiuxiu may have only been for retouching, but now Meitu Xiuxiu has dozens of functions and has extended various functions.

When I invested in OK Exchange in 2014, my understanding of Bitcoin was not enough. At that time, I just thought it was a new thing and I was willing to try anything new. But I won't blindly cast a net for investment, because most projects won't succeed. The most important thing is to choose a direction, and you need to see if this direction can develop in the next ten years.

Another crucial point is that I believe everyone should not set limits on themselves, because sometimes the more we understand, the more we become fixated on our previous successful experiences and perceptions, 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 align with your long-term investment strategy for the Web 3.0 ecosystem?

Cai Wensheng: Here we will talk about what Web3 is. Web3 is different from Web1 and Web2, the so-called third-generation Internet, and its core feature is decentralization. Blockchain is a representative of decentralized technology, and Bitcoin is an application of blockchain, but Bitcoin is not the entirety of Web3.

There will be various trends and combinations in Web3, and the core essence remains decentralization. Blockchain happens to be an important foundational support, and Bitcoin is a typical representative of blockchain. Many people enter Web3 through Bitcoin, so Bitcoin will occupy a significant position in many people's investment portfolios. But personally, I believe that in the future, Bitcoin will only be one asset in the entire Web3 ecosystem, and the Ethereum we see now has also become an asset. There may be more new recognized assets in the future. As a leader, Bitcoin will always have enormous value.

When I first entered Web3, it was the same - buying Bitcoin. But from my personal perspective, if I want to make some long-term investment strategies in the future, I need to step out of Bitcoin. Not everything is related to Bitcoin. As I mentioned before, before 2019, I always valued Bitcoin the most; After 2019, I placed greater emphasis on the Ethereum ecosystem. Of course, both of these assets have already proven their success. As for whether a third ecosystem will emerge, I think it is already in its infancy. For example, the Solana ecosystem, with the popularity of MEME, will make people feel that the Solana ecosystem is worth paying attention to. Of course, it has only made some progress and cannot prove that it is the future. So my current view is that both Bitcoin and Ethereum have proven to have vitality and value, while others have begun to sprout and develop, and we must pay attention to them.

MetaEra: Could you please disclose the ratio of traditional investments to cryptocurrency assets in your current investment portfolio?

Cai Wensheng: In 2019, I only invested 10% of my funds to purchase cryptocurrency assets, and the remaining 90% remained in traditional asset allocation. Although traditional assets have returns, the returns of encrypted assets are even higher. Today, the value of encrypted assets and the value of traditional assets have each accounted for 50%. Let me look back, if I had invested 30% in cryptocurrency assets back then, their current value would have far exceeded the value of my traditional assets.

I think investing in cryptocurrency assets before 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 individuals would you be more inclined towards? Or, which tracks in the industry are you particularly optimistic about currently?

Cai Wensheng: When looking for investment targets at the beginning, there will be more projects to consider. As I invest more and more, I end up seeing more people, and I have also gone through this process. In the early days, I tended to lean towards the track, but later I realized that the projects I invested in had two different outcomes: the initial presentation of the PPT and the actual execution. Therefore, I believe that people are more important. If a person truly has the ability, they will constantly make changes and ultimately achieve success.

For the industry track, I think it must be a direction that can be developed in the future, because in an undeveloped direction, the harder you work, the farther you will go. For now, I am interested in both Web3 projects, and another major track is AI. Both are important tracks, and I believe that AI and Web3 may be closely integrated in the future.

Returning to the track of Web3, I think we can refer to the development of Web1 at that time. We all know that the earliest developed portal websites were like Yahoo, Sina, and Sohu, followed by vertical channels such as automotive and real estate, and later chat tools and social networks. But I found that the earliest track to make money was in gaming. Legendary Games was the first game to go public on NASDAQ and also make a lot of money. Therefore, in the current Web3 field, I personally investigate the gaming track. On the one hand, games can quickly make money in a short period of time, and on the other hand, Web3 games are a channel to attract new users.

Although Web3 games like Axie and STEPN three years ago pioneered the idea of making money by playing games, they ultimately did not continue to operate, which is related to their economic model. If the game blindly rewards or rewards too much at the beginning to attract users, these will not be sustainable. But that doesn't mean this path won't work. In traditional games, less than 10% of people are spending money, and the other 90% are playing with them. If there is a good economic model in the future, these people can make money, which is the core of Web3. So Axie, STEPN and other games made a good start and made attempts. Although they were not very successful, I believe that in the coming years, we will definitely see better cases where 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 gone through hardships, how do you view the phenomenon of overnight wealth in Web 3.0 and the dream of getting rich quickly it creates? What is your opinion on this magical wealth creation effect?

Cai Wensheng: This is also the reason why cryptocurrencies have always been so controversial. If you look at Web1, Web2 and mobile Internet, there is no dispute and everyone will accept it. Because Web1 and Web2 require your own efforts to gradually accumulate your users and build your business model, both of which require time to accumulate in order to ultimately succeed.

But at the beginning, the product form of Web3 was related to finance, whether it was Bitcoin or Ethereum, including other projects that needed to raise funds. After the coin was issued, there was indeed an opportunity for overnight wealth, but it could not be sustained. Because I have seen countless people who have made a lot of money through cryptocurrency trading or contracts. If you make money too quickly, you will eventually lose it too quickly. I have hardly seen anyone who has made a lot of money through contract trading and can continue to do so until now. Of course, there may still be a few people, but I don't know if they can make it to the end.

For individual participants, I believe that in order to achieve great success, it is necessary to truly participate in project construction. This is not just about pursuing financial returns, but also about entering through DAO, which can create a sense of participation and achievement.

We know about the halving cycle of Bitcoin. From the first two cycles, many people have made money in the past, but in the end, most of them have returned to zero. This Bitcoin halving cycle, you will find that this effect has been increasingly shortened. Solana may have tens of thousands of MEME coins the previous day, but in reality, there are too few coins that can emerge. Secondly, the wealth effect is too short, and the huge market fluctuations may be within a few hours, or even just a few tens of minutes.

So for Web3 practitioners, cryptocurrency trading in Web3 is just one part of it, and it may also have certain benefits. It will form a network effect and encourage everyone to participate. But if you want to succeed through cryptocurrency trading, I think it's very difficult, and ultimately you 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, only then will you receive the ultimate great reward.

MetaEra: With the opening of Bitcoin spot ETFs in Hong Kong, how will this new development affect the strategic layout of Hong Kong listed companies in the digital currency field?

Cai Wensheng: Cryptocurrencies have gained increasing recognition, and Hong Kong has always been a financial center open to the outside world. We can also see that the Hong Kong government's strong promotion of web3 development should be supported by Chinese policies. On October 31, 2022, the Hong Kong Special Administrative Region issued a policy declaration on the development of virtual assets in Hong Kong, which quickly opened up exchanges and spot ETFs, making Hong Kong a Web3 center again. We can also see that Meitu was the first listed company in Hong Kong to purchase cryptocurrency, and later we also saw listed companies such as Boya Interactive and Blue Harbor following suit. I believe that more and more listed companies will use cryptocurrency as their asset allocation.

MetaEra: How do you evaluate the development prospects of the combination of Web 3.0 and AI? Which one is more important?

Cai Wensheng: My current focus is on Web3 and AI. The two are not in conflict, perhaps they will complement each other. There is a good case study, which is Sam Altman, the founder of Open AI. He is a staunch supporter of Web3 and currently has two entrepreneurial projects, ChatGPT and WorldCoin. Earlier this year, WorldCoin's market value had already reached billions of dollars, the same as Open AI founded in 2017. WorldCoin only took a little over a year to achieve this. So it shows that the systems of Web3 and AI are inseparable, representing two directions. AI represents the improvement of production efficiency, while Web3 represents the improvement of production relations. The combination of these two will generate greater value. I can't say which one is more important, I think both are equally important.

MetaEra: Currently, Hong Kong, Singapore, and Dubai are all vying for the Asian digital finance center. Which do you think has a greater opportunity. What will happen to the development of the web in mainland China? Will digital currency trading be open in the future?

Cai Wensheng: I have a deep understanding of all three places, and now I spend more time in Hong Kong, so I must be more optimistic about Hong Kong. As far as I know, Binance's first subsidiary established overseas is in Hong Kong, and FTX's entrepreneurship is also in Hong Kong. Tether, the largest stablecoin issuer, was also established in Hong Kong. It should be said that Hong Kong is the earliest birthplace and cradle of cryptocurrency. Due to the pandemic in recent years and the unclear policies of the Hong Kong government towards Web3, many people and projects engaged in Web3 have been forced to move 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 each have their own advantages. From a policy perspective, Dubai is the most open, but it has natural flaws. Firstly, the environment and climate are not suitable. Secondly, there is a shortage of basic resources and technical talents. Singapore has attracted a large number of developers and financial managers in terms of policy stability. However, Hong Kong combines all its advantages, with more open policies, proximity to the mainland, abundant basic resources and talent, and support from traditional financial centers. I am very optimistic about Hong Kong's successful experience, and it may even be transmitted to mainland China in the future. Not long ago, I saw the retired vice president 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 believe it already represents a trend that mainland China is rethinking the development of Web3 and cryptocurrency. This is not something that can be achieved overnight. I think in the next few years, China will definitely embrace Web3 and even reopen digital currency trading.

MetaEra: What advice or guidance do you have for young entrepreneurs who are committed to the Web 3.0 field to share?

Cai Wensheng: I want to emphasize that Web3 is a very huge opportunity. The technology of blockchain is decentralized, and its presentation is cryptocurrency. Therefore, it is not wrong for everyone to enter the Web3 industry from cryptocurrency first. But don't just focus on cryptocurrency, there is huge opportunity and space for the entire Web3, and many fields can participate.

The first point is that even if you only focus on cryptocurrency, don't just speculate, just trade. You can build various things here. If you can view it in this way, your room for expression will be greater.

Secondly, for an entrepreneur, it is essential to recognize their own strengths. Do you think you are more focused on technology, finance, or management? You must combine your strengths. It's best to have the ability to start your own business. Even without resources, you can join a team to create together.

Thirdly, from the perspective of Web1 and Web2, true success truly requires the accumulation of time. When you invest in the Web3 field, you also need to accumulate time. Of course, it may take less time than Web1 and Web2, not five or eight years, but it still takes some time to achieve. It's really difficult to get rich overnight, you may quickly gain or lose.

The fourth point is that China is currently not open to cryptocurrencies, and I think those who have the conditions should still go abroad and develop overseas. If one day there is already a foundation and China has an open policy, we will return to the mainland to develop and build. Going abroad will be a factor that must be considered when entering the Web3 field. Based on the characteristics of Web3, my understanding is that the future Web3 may not distinguish between domestic and overseas markets, nor will it distinguish any country. This is also the direction that all practitioners strive for, hoping to connect the whole world through Web3. Additionally, the ultimate goal of cryptocurrency may be to eliminate existing national currencies. Although this may take a long time, it is also the charm of Web3 and its long-term direction.