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Sequoia Capital: Why We Are Auctioning 2005 YouTube Investment Memo in NFT Form

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In the next phase of digital evolution, the role of distribution gatekeepers will diminish. Creators will gain control over assets and transfer them from aggregators to network participants.

Original title: "Why We are Auctioning an NFT of Our 2005 YouTube Memo"

Original author: Team Sequoia

Original compilation: Alex, Shenchao TechFlow

At the beginning of 2021, the total value of the cryptocurrency market exceeded $1 trillion for the first time. Even the staunchest skeptics took notice. In November of this year, that figure topped $3 trillion, more than the market capitalization of any company on Earth. Thousands of developers are now building crypto projects, with most of the activity happening in the past three years. Today there are over 7,000 tokens, a nearly 12x increase from early 2017.

Crypto is having a Cambrian explosion. While we've been investing in cryptocurrencies for years, the recent acceleration in the space has been astounding. Last year, over a quarter of Sequoia’s new partners in our US/Europe business were crypto-related companies, and as part of our new structure, we will be more directly involved in governance and token stakes. The question is no longer whether cryptocurrencies will win mainstream adoption, but how, in the next generation, blockchain technology will transform the economy and our digital lives.

We know from experience how easy it is to underestimate these transitions. For example, when we first met Chad Hurley, Steve Chan, and Javed Karim, who were just starting to create YouTube, we imagined the massive future scenarios that might see widespread adoption . In our investment memo, the best-case scenario has the potential to serve 30 million videos per day. This represented a 300x increase, which seemed ambitious at the time. But that was two years before the first iPhone and the rise of the mobile phone, which multiplied global video consumption. Today, YouTube serves 5 billion videos every day.

In this transitional moment for cryptocurrency, we have been reflecting on the 2005 YouTube investment memo. We realized how critical YouTube was not only in defining the evolution of the Internet over the last generation, but also in laying the groundwork for the creator economy and what comes next. To honor YouTube’s place in this story, and to celebrate the unpredictable benefits of underlying technologies like encryption, we’re minting our original YouTube investment memo as an NFT and auctioning it off on OpenSea.

The rise of the blockchain echoes the rise of the Internet itself: the direct and free flow of information between people on the Internet becomes the direct and free flow of information on the blockchain. The free flow of value lays the groundwork. This is not just a technological shift, but a cultural and psychological shift that will enable new economic realities to emerge around the world. In the world of NFT, anyone can create digital assets and anyone can invest in them, which brings unprecedented diversity to asset valuation and trading.

We now see YouTube as an inflection point that paved the way for how we think about the creator economy today. YouTube personalizes the notion of ownership of digital assets and mainstreams the widespread distribution of those assets. YouTube's investment memo is a time capsule on the web2 cliff. It seems only correct to mark it for posterity. What better time to auction it off on the precipice of web3?

In the next phase of digital evolution, the role of the distribution gatekeeper will diminish . Creators will gain control over assets and transfer them from aggregators to network participants. But blockchain's impact extends far beyond the way currencies and digital goods are valued and traded. Decentralized protocols and new entities like DAOs could reshape everything from how products are built to how people communicate and create communities.

We cannot predict the scope of the change or how it will reshape the culture. At these early stages, we don't know what will catalyze the crypto, or which direction it's headed. These catalysts may be technological, regulatory or cultural. It’s unclear whether this shift is coming from the world’s new diversity of currencies, or from blockchain-powered decentralized applications — or both.

But it seems clear that blockchain technology is starting to form new protocols for digital interactions at a fundamental level. Innovation is accelerating at the application level above layer 1 blockchains, and at the application layer below layer 1: one of the most exciting developments we have seen is the pursuit of a protocol that will enable different blockchains to Blockchains can interoperate fluently. This work can be compared to TCP/IP for encryption. What this could unlock, we can only imagine. Early web enthusiasts knew it would change everything, but they couldn't have foreseen stock trading on the iPhone. The same goes for encryption today.

Whatever the future of web3 holds, visionary founders will be the ones to shape it, just like Chad, Steve and Javed before them did. Our mission is to find the brilliant founders behind the innovations of the next era.

The best way to prepare for the possibilities of emerging technologies is to learn and understand through an insatiable curiosity. So starting next week, we'll start hosting a series of live conversations about encryption on Twitter. From the founders and innovators driving crypto forward, we'll gain a global perspective on its potential and challenges—from technology and scale to regulation and business infrastructure. We'll be talking to some of the brightest minds in crypto, and we'd love to learn in public. If you're a cryptocurrency founder -- or just curious -- we hope you'll tune in and chat with us.

Before the live chat on twitter, happy bidding on the 2005 YouTube memo. Proceeds from the auction will be donated to 0xPARC (Program for Applied Research in Cryptography on Ethereum) public goods ecosystem development pool, which will distribute these funds for the greatest benefit of the crypto community. We mint NFTs as ERC-721 tokens. The auction will be held at OpenSea and will end on Tuesday, December 7th. We do not keep a royalty share - the winner will own 100%. We're remaking history, and you can own a part of it.