Web3 Startup Hiring Survived the Pandemic. Is This the End?

If the original incarnation of the Internet was Web 1.0, and the advent of social media was Web 2.0, then decentralized web technologies — commonly referred to as “Web3” — represent the next major shift in how people might soon access the web and online experiences.

Like the giants of Web 2.0 before them, decentralized Web3 technology companies have attracted significant sums from investors. According to data from Crunchbase, Web3 startups attracted unprecedented levels of investor funding last year: almost $18 billion was invested across more than 1,300 Web3 startups in 2021 — more than the total funding invested in such companies in 2018, 2019, and 2020 combined. The rapid pace continued at the start of 2022.

However, just a few months later, optimism has given way to stunning losses in the crypto market. May 2022 saw a precipitous crash in value of virtually all crypto assets, including mainstream tokens such as Bitcoin and Ethereum, with more than $1 trillion of value lost. As a result, many formerly bullish investors are reassessing the long-term feasibility of their cryptocurrency portfolios, and the job losses are mounting as industry leaders ready themselves for another “crypto winter.”

We dove into ZoomInfo’s vast repository of B2B data to examine the trends that are shaping these emerging technologies, learn what’s driving investor interest, and identify the major players who are shaping the future of Web3.

Web3: The Next Paradigm Shift?

Depending on whom you ask, the precise definition of what Web3 is can vary widely. Despite disagreements, most people agree that these Web3 technologies are largely defined by their decentralized nature. 

Rather than being proprietary technologies owned by specific corporations, such as Google’s core search algorithms, Web3 projects rely on blockchain technologies, online ledgers of transactions, and digital assets such as cryptocurrencies that are publicly visible. 

One of the most common misperceptions about Web3 is that “the blockchain” is a singular decentralized record of all interactions on the network. Rather, there are multiple blockchains, with some, such as Ethereum, more popular than others.

The current landscape of Web3 technologies is split into two distinct “tiers.” Tier 1 is comprised of larger companies that provide the underlying architecture powering decentralized web applications. This includes companies such as Alchemy and Blockdaemon, as well as projects being led by Coinbase and Google. 

Tier 2 companies are the developers building Web3 applications atop the infrastructure provided by the Tier 1 companies. This includes everything from non-fungible token (NFT) marketplaces such as OpenSea, to crypto payment providers such as BitPay. 

How ‘Decentralized’ is Web3, Really?

Advocates of Web3 often claim that the decentralized nature of Web3 technologies gives users more freedom than legacy web technologies. However, while this may be true to a certain extent — particularly in the case of decentralized finance, or DeFi, which is credited with expanding access to financial services — many popular blockchain technologies still rely on architectures such as Amazon Web Services (AWS). This represents the kind of potential point of failure that decentralized technologies ostensibly exist to overcome.

Critics argue that, while Web3 technologies themselves may be more decentralized than their Web 2.0 predecessors, a small number of wealthy institutional investors retain outsized control over the nascent sector, which could undermine the ideals upon which Web3 was built.

Which Industries are Embracing Web3 Startups?

ZoomInfo’s data indicates that, while many industries are exploring the potential of decentralized web technologies, few are doing so as enthusiastically as the financial sector. 

Between 2020 and 2022, many leading Web3 companies hired top talent from a range of sectors, including aerospace and defense along with “traditional” technology companies such as Google. However, ZoomInfo’s analysis of senior-level hires from 100 Web3 companies with the most prolific talent acquisition plans shows that nearly a third of roles were filled by veterans of the financial sector. 

Finance’s dominance in the Web3 job market is more than double the share of specialized, high-skill roles filled by workers formerly in the software or business services industries, for example.

“We typically see technology startups trying to disrupt non-technical sectors being started and built by people with technical or more entrepreneurial backgrounds,” says Brandon Tucker, vice president of data strategy at ZoomInfo. “We were surprised to see so many senior leaders leaving top financial institutions to join these Web3 startups that have seemingly opposing principles and philosophies.”

Companies such as Crypto.com have secured talent from high-profile organizations, including BNP Paribas and Deloitte, as well as global payments giant Visa. Coinbase has attracted senior executive talent from hedge fund Citadel LLC, in addition to legal counsel from Google and product talent from Facebook. 

Though cryptocurrency services provider GSR may lack the brand recognition enjoyed by Crypto.com and Coinbase among consumers,  they have enticed executive talent from AQR Capital Management, Goldman Sachs, JP Morgan, and Two Sigma Investments, among others.

Movement of key personnel from traditional tech companies into crypto startups is to be expected. Since many Web3 startups are working at the leading edge of emerging web technologies, they offer talent from the world’s leading technology firms the chance to work on some of the most challenging technical problems in the industry.

The number of senior personnel moving from traditional financial roles into crypto, however, is noteworthy. While some financial executives still view cryptocurrencies with skepticism, the current landscape of talent acquisition at leading DeFi companies suggests that the projects these companies are working on are sufficiently exciting — and potentially lucrative enough — to lure experienced executives into careers in Web3. 

Compensation at Web3 startups

The influx of investor funding into Web3 startups gives these companies a crucial compensation edge over their traditional Web 2.0 counterparts. Some Web3 companies have reportedly been paying between two to five times what traditional tech companies can offer. It follows that executive compensation would be similarly elevated at companies flush with VC cash.

Indeed, recent press coverage has focused on anecdotal reports from talent recruiters who note that compensation at Web3 companies is now a major driver in luring tech talent from established organizations in the tech sector.

In ZoomInfo’s dataset, the most common previous employers — reaching back two previous jobs — were SoFi, Facebook, Goldman Sachs, Google, Standard Chartered Bank, and Visa. 

Hiring Pace Undaunted by Pandemic

ZoomInfo’s analysis of hiring data in Web3 companies also shows that expansion in the sector was not slowed by the COVID-19 pandemic, with increased headcount among senior roles in 2020 and 2021. 

Web3’s Uncertain Future

Despite the clear interest in decentralized web technologies in the financial sector and other industries, many Web3 projects have yet to demonstrate their potential worth. 

Businesses built on trust-based interactions, such as identity verification, could see continued innovation in the coming years thanks to blockchain technologies’ inherent strengths in authenticating individual identities from disparate data sources. Researchers are working to develop blockchain-based solutions to problems of identity verification among homeless people, for example, that could help them access support and healthcare services more easily.

Elsewhere, in sectors such as automotive manufacturing, companies are experimenting with using Web3 to improve transparency in their supply chain operations. Electric vehicle manufacturer Polestar claims its Web3-enabled supply chain innovations will offer greater accountability in how rare-earth minerals used in its cars, such as cobalt and mica, are mined.

Broadly speaking, however, it remains to be seen whether adoption of decentralized web technologies will become truly mainstream. The sudden collapse in value of virtually all major coins and crypto-backed assets that occurred in May 2022 revealed the inherent volatility of non-fiat currencies and tokens, leading many industry analysts to question Web3’s viability.

While some optimists and investors remain convinced of its potential, the question remains whether blockchain-based financial instruments can solve problems in the financial sector more effectively than existing mainstream technologies.