We all heard about the idea of [private equity](https://inleo.io/@leoglossary/leoglossary-private-equity) firms.  This is regular discussed by the financial [media](https://inleo.io/@leoglossary/leoglossary-media).   Entities such as Blackstone and KKR regularly make headlines.


These [funds](https://inleo.io/@leoglossary/leoglossary-fund) are great in theory.  However, in practice they tend to crush [companies](https://inleo.io/@leoglossary/leoglossary-company-business) while extracting as much value as possible.  Basically, we are looking at modern [day](https://inleo.io/@leoglossary/leoglossary-day) financial pillaging.


When it comes to the top dogs, we are talking about tens of billions of dollars.  Some of these are huge entities, involved in some of the best known companies in the [world](https://inleo.io/@leoglossary/leoglossary-world).  They also have a way of inserting themselves in [industries](https://inleo.io/@leoglossary/leoglossary-industry), completely dominating what is taking place.


In this [article](https://inleo.io/@leoglossary/leoglossary-article) we will take a look at private [equity](https://inleo.io/@leoglossary/leoglossary-equity) and how [Web 3.0](https://inleo.io/@leoglossary/leoglossary-web-3-0) can change it.

https://ideogram.ai/api/images/direct/ZMtPNr8fQ-yvGKq61I6xyw.png
Image generated by Ideogram

# Web 3.0 Is The Counter To Big Money Players


Before going any further, let us mention what private equity is.


These are firms that take a controlling stake in private companies.  The idea is to [buy](https://inleo.io/@leoglossary/leoglossary-buy) them up, improve efficiency to make the company more profitable and then [sell](https://inleo.io/@leoglossary/leoglossary-sell) the entity at a later date (say 5 years).


On the surface this looks good.  There is, however, a darker side.


To start, the way to improve efficiency is to lay people off.  While that is often a necessary part of restructuring, these firms push the levels as low as they can.  This could have major consequences in fields such as [healthcare](https://inleo.io/@leoglossary/leoglossary-healthcare-industry).


Another problem, this one from the financial side, is these deals are funded with [debt](https://inleo.io/@leoglossary/leoglossary-debt).  Basically, the firms are not using their money.  Instead, they [leverage](https://inleo.io/@leoglossary/leoglossary-leverage) the [assets](https://inleo.io/@leoglossary/leoglossary-asset) of the company being purchased to [finance](https://inleo.io/@leoglossary/leoglossary-finance) the deal.  Again, on the surface this isn't a negative, yet the practice limits future operations.


Private equity firms tend to specialize at selling during [bull markets](https://inleo.io/@leoglossary/leoglossary-bull-market).  That means that while structural changes might be made, the true return is simply taking advantage of [market](https://inleo.io/@leoglossary/leoglossary-market) dynamics.  They step out with a [profit](https://inleo.io/@leoglossary/leoglossary-profit), leaving behind a company that has even more debt than before.


Basically, private equity is the [counterparty](https://inleo.io/@leoglossary/leoglossary-counterparty) to Blackrock and Fidelity, firms that take large stakes in public companies.


These are the entities that are in control.  Obviously, we can only look at publicly traded companies but these firms are usually large stake holders in most companies you do [business](https://inleo.io/@leoglossary/leoglossary-business) with.  They are known as institutions.


We cannot see with the same degree of [transparency](https://inleo.io/@leoglossary/leoglossary-transparency) what private equity is doing since the entities they are acquiring are private.  That said, we see how the big money game is played and what they do to leverage their power.


## Distribution and Fragmentation


What we are looking at is [centralization](https://inleo.io/@leoglossary/leoglossary-centralization).  No matter how we analyze this, we are dealing with a system that favors the larger firms.  They are able to deploy [capital](https://inleo.io/@leoglossary/leoglossary-capital) in a targeted manner.  Also, the industries they are going after are highly centralized.


Web 3.0 takes the opposite approach.  Here we are dealing with smaller.  Instead of a few major entities, the goal is millions.  When we look at some different industries, the idea is to ride the wave of fragmentation.


Here is where the [network-state](https://inleo.io/@leoglossary/leoglossary-network-state-76ugqy) idea enters.  As [networks](https://inleo.io/@leoglossary/leoglossary-network) have more built on them, they end up becoming similar to nation-states.  However, the entities on top are all individual, with different communities participating.  With so many [options](https://inleo.io/@leoglossary/leoglossary-options), the attention [economy](https://inleo.io/@leoglossary/leoglossary-economy) expands in more directions.


Nothing epitomizes this more than [entertainment](https://inleo.io/@leoglossary/leoglossary-entertainment).  


[Hollywood](https://inleo.io/@leoglossary/leoglossary-hollywood-film-industry) is owned by a combination private equity and the likes of Blackrock.  [Movie studios](https://inleo.io/@leoglossary/leoglossary-movie-studios) are like everything else with these funds have impactful stakes.  Then we have private equity swallowing up things such as the talent agencies.  


No matter where you look, the big money players have their hands in it.


Web 3.0 changes this.  


It starts with the fragmenting of attention.  Instead of turning to content created by the major studios, distributed on their platforms, we can start to focus our attention elsewhere.   When this is done tens of millions of [times](https://inleo.io/@leoglossary/leoglossary-time) per day, it has an effect.


We also see the advancement of [AI](https://inleo.io/@leoglossary/leoglossary-artificial-intelligence) tools also favoring this.  As we enter the next wave of abundance, AI content creation is going to be a major part of this.  That means things such as talent agencies will not wield the same [power](https://inleo.io/@leoglossary/leoglossary-power).


## Having Our Own Money


The financial possibilities with Web 3.0 are enormous.  I do not believe many have fully grasped the power of having the ability to create our own money.  Certainly they are not aware of where [currency](https://inleo.io/@leoglossary/leoglossary-currency) derives it value and what needs to be done there.


However, if these things take place, we could see a massive shift, probably in a short period of time.


The abundance-scarcity model is always in play.  What happens when that which was scarce suddenly becomes abundant?  One of the keys to all this are networks.  Those are becoming abundant meaning that even a distribution channel like [YouTube](https://inleo.io/@leoglossary/leoglossary-youtube) is going to feel the pinch.


Having our own money means different [incentive](https://inleo.io/@leoglossary/leoglossary-incentivize) structures can be developed.  At the same time, the potential to build an entirely new financial system is before us.  This means being able to leverage the value we create, much in the same way as private equity and [hedge funds](https://inleo.io/@leoglossary/leoglossary-hedge-fund).  


The major difference is we are able to do it without raising money.  Unlike [Wall Street](https://inleo.io/@leoglossary/leoglossary-wall-street), the value created from our activities is what provides the value.  With the proper financial tools, we could see an ever expanding [vault](https://inleo.io/@leoglossary/leoglossary-vault) of value that can be put to use so as to counter the present system.


This is why we discuss the idea of something such as Hive [bonds](https://inleo.io/@leoglossary/leoglossary-bond).


Like most topics regarding Web 3.0, the possibilities expand the further we dig into it.  Nevertheless, it always seems to revert back to the same simple concept: [decentralization](https://inleo.io/@leoglossary/leoglossary-decentralization).


____


[What Is Hive](https://inleo.io/@leoglossary/leoglossary-what-is-hive)


Posted Using [InLeo Alpha](https://inleo.io/@taskmaster4450/web-30-to-counter-the-control-of-private-equity)