The Matthew Effect in Emerging Categories Anyone who has ever built a company or worked for a well-funded startup understands that the best "emerging categories" in an exciting industry typically operate under the Matthew Effect IMO, it's an ideology that perfectly captures how technology evolves. I've seen it play out a few times in my ~10 years at tech startups What is the "Matthew Effect?" The Matthew Effect is best described as "winners win" - i.e. those who gain an initial advantage in social, economic, or competitive games tend to compound that advantage over time The formal definition: it’s a social phenomenon where those who start ahead continue to accrue more influence, capital, and success, while those who start behind struggle to catch up Why Does This Occur? It's really 2 main reasons 1. Inherent Advantages - Simply, the early winners often have intrinsic strengths that are difficult to replicate. This could mean many different things, but in memes this is strong holders & true emotional resonance w/ the token & its ethos 2. Compounding Effects - All buyer psychology suggests that familiarity matters. Most people will not make moves until FOMO kicks in. When it does, they will choose what they already recognize (well documented fact for my non-marketing people). This reinforces the dominance of early winners and makes latecomers even more irrelevant How This Applies to Startups & Venture The Matthew Effect in startups is actually reallly similar to catching beta trends onchain Take 2010s B2C tech (where my career started)—Airbnb and Uber kingmade the model for peer-to-peer marketplaces with a fee structure So what happened next? >VCs got hounded by their LPs: “How did you miss this?! We need exposure to this segment now.” That pressure then leads to massive funding injections for imitators like Turo, Lyft, and Fiverr—all chasing the same market but with inherently lower upside >Founders then face similar pressure: “These guys raised at [XYZ valuation]! There’s traction & capital here! We should pivot and do this too” This dynamic drove more capital into weaker variations, which only ended up reinforcing the original winners (e.g. Lyft & Uber) The Matthew Effect in Crypto Startups and crypto operate under the same human psychology, the only difference is Crypto markets move even faster because trends are liquid & reinforce ideas faster That means if a new category emerges and fails to deliver on its promise, capital exits instantly You saw this cycle unfold with AI recently in summary >2010s SaaS & B2C: Salesforce, Microsoft, Uber, Airbnb → Late-stage competitors faded. >2020s VC Layer 1s: Solana, ETH → Overfunded ghost chains with no real traction >2023+ Memecoins -> The strongest holder bases are winning, while thousands of copycats will I think you will see something like the graphic attached unfold My personal favorite examples of true category winners are #spx6900 -> Unique mission w/ holders who have true mission to keep them motivated $giga / $sigma / $lockin -> Masculinty trio that each cover a different area of success in a world where young men search for meaning & community $apu -> Tokenized frenship All these communities have only reaffirmed their strengths (holder growth + community activity) during the last few months