As web surfers hop between the centralized behemoths of the mainstream internet like Google and Facebook and the wild world of crypto’s decentralized finance and non-fungible tokens, a new startup called Spindl wants to know.
The Miami-based company is trying to recreate a basic part of Web2’s e-commerce backend for Web3. This part is called “web attribution” and is how Internet companies track where their customers came from – and develop user acquisition strategies to get more.
Antonio García Martínez, Spindl’s CEO and a Silicon Valley advertising technology (AdTech) veteran, said attribution is an essential part of e-commerce. “If the mapping fails – imagine running water in New York City failing. It’s going to be chaos.”
Knowing this way to sell is crucial for companies launching successful advertising campaigns; The software industry they support — led by big names like Adjust — is worth $1 billion annually, according to Future Markets Insights. But the mainstream attribution platforms are not “chain aware,” García Martínez said: “There’s a wall between Web2 and Web3.”
Although the crypto industry already has a healthy sub-sector of on-chain sniffer dogs that tag wallets and track assets, it still has a lot to develop in terms of attribution in the Web2 sense, García Martínez said. The result: OpenSea knows who bought this or that CryptoPunk, but not how this buyer ended up with OpenSea.
Spindl “measures the funnel” of Discord posts, Reddit forums, ad impressions, and other blue links that help people navigate the web; It then combines this data with on-chain behaviors like buying, selling, and trading to create profiles that help the logs understand where the traffic is coming from.
If companies want user engagement on their platforms, they need attribution software, crypto-native or not, García Martínez said.
García Martínez said he raised $7 million from crypto venture capital firms including co-leads Dragonfly and Chapter 1, as well as Polygon Ventures, Tribe Capital, Multicoin and a few angel investors. He said the money will go toward hiring.
“Spindl or not, I think there needs to be a decentralized protocol for attribution in Web3,” García Martínez said.
The reason: Centralized incumbents like Google and Facebook have too many conflicts of interest to also serve as arbiters of truth attribution, he said. Crypto’s focus on creating trustless systems is to describe the perfect use case for attribution.
If a fully decentralized, fully on-chain, crypto-native entity governed by a decentralized autonomous organization is the solution, then Spindl is not — at least not yet. While García Martínez said he was “absolutely in favor of decentralization and composability and trustlessness,” crypto companies’ belief that Spindl’s data is worth it comes first.
“We’re starting out centralized just to address the short-term pain points,” he said.
García Martínez wants Spindl to take small steps toward decentralization, distributing power where it makes sense without falling into a philosophical trap for the business. The data could be hosted on-chain and in smart contracts, for example. Later he thinks that a decentralized protocol should form Spindl’s basis.
However, if online ads are to be rewarded for their conversions, someone needs to take on that role of arbiter: “At the end of the day, everyone has to agree that x caused the y.”
Spindl is dealing with this question of causality, said García Martínez. A number of things could have resulted in a user’s continued engagement on a crypto platform: the Discord server, the social media posts, the NFTs.
“We have to somehow figure out how reality works in Web3 before we can start wrapping products around it,” García Martínez said.