a16z Crypto Partner: Cash flow is the moat

Author: Jason Rosenthal, a16z Operating Partner

Compiled by: Hu Tao, ChainCatcher Selected

Many of the best companies in history have been built by positioning themselves within the "flow of funds"—facilitating the creation and transfer of value within networks and extracting a portion of it. The more value that flows through a network, the larger the company typically grows.

Cryptocurrency is the first modern technology built natively for this purpose. If your startup has not structured its products and business to benefit from these principles, you are missing a great opportunity. Thanks to stablecoins, funds and value now flow at internet speed—around the clock, with global settlement, and end-to-end programmability. Payment channels are unobstructed, unit economics are transparent, and every dollar flowing globally is accessible.

Specific Models

Blockchain is designed as a networked enterprise. Every transaction settles on a shared ledger. Each new participant strengthens the same underlying network that the next builder can use. As more people use and build on it, the network becomes more valuable for all users.

Most companies spend years creating network effects on traditional infrastructure. Crypto founders inherit them as starting conditions.

Network tokens amplify this. Well-designed tokens can align users, developers, suppliers, validators, and protocols around a single outcome—growing the network—and pay proportionally based on each participant's contribution. But the revenue of the protocol belongs to those who use it. No partner kickbacks, no private deals. Just a feedback loop between the value flowing in the system and the value accumulated in the hands of those who build and develop it.

This is not a new model. Cryptocurrency simply makes it easier for startups to access and scale it for the first time.

Railroad companies did not make money from locomotives. They made money from every ton of grain, coal, and steel that crossed their tracks. Standard Oil, U.S. Steel, and AT&T are companies positioned within the flow of funds. Google and Meta replaced print and television not because their ads were better, but because they sit at the bottleneck where attention converts to business, allowing them to extract a portion from trillions of dollars of commercial intent. AWS is positioned within the flow of computing.

This model is consistent: find where value flows and place yourself in the middle of it.

Financial markets make this model clearer. Visa processed $157 trillion in payments in fiscal year 2024 and reported $35.9 billion in net income. Jane Street reported $20.5 billion in net trading income last year—more than Citigroup or Bank of America. The top five U.S. market makers handle 87% of order flow payments: they do not predict the market; they are in the flow of every order and earn more as trading volume increases.

These companies also share another commonality: network effects. Visa is more useful to more merchants because there are more cards; it is more useful to more cardholders because more merchants accept it. The same goes for order flow—every new broker narrows the spread, attracting more brokers and thus more flow.

The combination of the flow of funds and network effects is one of the most enduring business structures in history.

Your Profit is My Opportunity

Bezos called it "your profit is my opportunity." He was talking about retail at the time, but this applies even more to traditional financial services—the world's largest profit extraction pool. Payments, custody, lending, foreign exchange, securitization, settlement, market making, without exception. Visa and Mastercard charge 2-3% transaction fees on the networks designed in the 1960s. Remittance channels charge 6-9%. Major brokers and custodians take a cut from every securities transaction. Even after the U.S. shifts to T+1 settlement in 2024, funds will still sit idle overnight as a structural tax on every participant.

Each of these profit margins is a target. Compress costs, increase speed, and potentially expand the entire market. Stripe and Square have proven this is feasible in payments.

Crypto founders have the opportunity to build the next version—programmable, instant, global, and natively positioned within the flow of funds.

And the frontier extends far beyond financial services. Computing and GPU markets. Memory chips. AI training data. Energy. Robotics. Space. Rare earth metals. Each category is a domain where global value can start flowing at scales that existing rails were never designed to carry.

Each is an open field for building a flow business from scratch on programmable infrastructure. These markets have no existing rails, no entrenched intermediaries, and nothing to defend.

As a founder, ask yourself:

1. Are you positioned within the flow of funds today?

2. When the value of activities on your product grows tenfold, does your revenue grow accordingly?

3. If you are building a new product, where in your target market is the margin for profit extraction the highest relative to the value being created?

The opportunity is there. Seize it, integrate into the new flow, and let the network begin to accumulate growth from there.