A Few Things.....
April 22 2021
“You can never leave footprints that last if you are always walking on tiptoe.”
- Leymah Gbowee (Liberian peace activist)
“More is lost by indecision than wrong decision. Indecision is the thief of opportunity. It will steal you blind.”
- Marcus Tullius Cicero
“Fear is good. Like self-doubt, fear is an indicator. Fear tells us what we have to do. Remember our rule of thumb: The more scared we are of a work or calling, the more sure we can be that we have to do it. Resistance is experienced as fear; the degree of fear equates to the strength of Resistance. Therefore the more fear we feel about a specific enterprise, the more certain we can be that that enterprise is important to us and to the growth of our soul. That's why we feel so much Resistance. If it meant nothing to us, there'd be no Resistance.”
- Steven Pressfield
A. A Few Things Worth Checking Out
1. Every ten to fifteen years there is a new computing cycle - from mainframes, desktops, mobile and now blockchains.
What’s special about blockchains and why they matter today is that they allow you to have a commitment about what software will do in the future and then it solves numerous coordination problems, including: deciding on a problem to work on and how to fund it, incentivising early users and developers, and bootstrapping a network or cause.
We went from an internet in the 90s where the rules were pretty consistent, and power distributed to now where the internet rules aren’t consistent and power is centralised amongst 4-5 big players.
While most people think Bitcoin when they hear the word blockchains, the actual discussion is much bigger and about the future of the internet.
I recommend diving deeper in this world, and Chris Dixon did a great job discussing the ecosystem on the Invest Like The Best podcast.
They cover Chris's (a16z) overall thesis for investing in the cryptocurrency space, the opportunities and limitations of blockchain applications, and why this is the most interesting area for investing and building over the next 10 years.
2. Finished Laurence Gonzales - Deep Survival: Who Lives, Who Dies, and Why. It’s a book combining hard science and story telling to discuss the mysteries of survival - whether in the wilderness or in meeting any of life’s great challenges.
Some reminders and lessons for me:
A. Always face reality. Understand and accept where you are now.
B. Stay open to change by being here now. Don’t ignore the present by trying to go back to a past that doesn’t exist.
C. Have a plan, but be open to that plan changing drastically. Have zen like detachment from the outcome by having humility to say I know nothing.
D. Don’t give up. You will survive. You will succeed. Questions to ask: What’s great about this problem? What can I learn from this?
E. Remember that every year you pass an anniversary unaware. The anniversary of your own death. Know that disaster can happen to you at any moment, and be prepared for it.
Here is Laurence in his own words - 3 mins:
3. Russia has amassed 100,000 troops at the Ukraine border and the US is considering sending missiles to Ukraine.
Vladmir Putin is one of the most powerful and ruthless global forces. His presidency has already lasted over 20 years. In July 2020, he further cemented his grip on power with the approval of a series of new constitutional amendments, giving him the ability to extend his presidency to 2036 and potentially making him the longest-serving head of state in modern Russian and Soviet history.
Earlier this week I heard from Fiona Hill, who is the foremost authority on Russia, and until 2019 served as the Senior Director for Europe and Russia of the National Security Council, and is now at the Brookings Institute.
While I can’t share details of that discussion with you, I would encourage you to watch her presentation at the Woodrow Wilson Center last year that discusses Vladimir Putin, his regime, and how her thinking on Putin has evolved over the years.
4. A thoughtful and important article by Professor Galloway - The Unifying Theory of Everything . Thank you David Giampaolo for flagging.
I think it all comes back to one central theme: income inequality. Capitalism is sort of this gangster construct that leverages a species’ selfishness and creates all sorts of prosperity from that selfishness. But the key to successful capitalism has always been a middle class. At the turn of the millennium, America was the only superpower, and we had the most prosperous middle class in the world. In the past 20 years, the key feature of China’s rise to superpower has been adding several hundred million people to its middle class. But for the past 50 years in America, we have decided to transfer wealth from the middle class to the shareholder class. The lower and middle classes haven’t done any worse, and they haven’t done any better but the share of income controlled by the top one percent has exploded. And I believe that creates all sorts of externalities.
Gamestop was a mini-revolution. Young people want volatility. If you have assets and you’re already rich, you want to take volatility down. You want things to stay the way they are. But young people are willing to take risks because they can afford to lose everything. For the opportunity to double their money, they will risk losing everything.
People under the age of 40 are fed up. They have less than half of the economic security, as measured by the ratio of wealth to income, that their parents did at the same age. Their share of wealth has crashed. Many are bored. For the first time in our nation’s history, a 30-year-old isn’t doing as well as his or her parents were at 30. That creates shame and rage in households across America.
5. China has launched its Central Bank Digital Currency (CBDCs). We can expect to see many more of these. Citibank had a great report on the Future of Money: Crypto, CBDCs and 21st Century Cash, discussing how the nature of money as we have known it will change.
6. a16z Podcast: Crypto, an Oral Essay. This is a special episode of the a16z podcast — it's an audio history, told through the voices of the a16z crypto team, about what crypto is, how it really works, and why it matters.
They take you from the basics, to the most current developments, and beyond…..
7. Another great and simple letter in crypto was from Pantera Capital - Five Orders of Magnitude. Dan Morehead founded Pantera in 2003 and previously served as Head of Macro Trading and CFO at Tiger Management with Julian Robertson. They do good monthly calls, which are worth a listen.
8. Markets always climb a wall of worry, and the latest worry or narrative that Bitcoin is climbing is its ESG credentials - specifically the amount of electricity used by the network. Square and ARK co-published on this:
9. Thoughtful article on why and how Tiger Global is disrupting the world of venture and growth equity. Thanks Yaser.
The article argues that Venture will split into two:
10. Union Square is one of the best venture firms in the world. They have backed the likes of: Twitter, Etsy, Zynga, CoinBase, Twilio….
Like Benchmark, they are a thesis based investors.
Given their successes and timing, I went and looked how their thesis has evolved:
Thesis 1.0: Large networks of engaged users, differentiated through user experience, and defensible through network effects.
Thesis 1.0 Examples:
Etsy – Seed, 2007
Zynga – Series A, 2007
Twitter – Series A, 2007
Thesis 2.0: As the market matures, we look for less obvious network effects, infrastructure for the new economy, and enablers of open decentralised data.
Thesis 2.0 Examples:
Twilio – Series A, 2009
MongoDB – Series A, 2008
Coinbase – Series A, 2013
Carta – Series A, 2014
Thesis 3.0: Enabling trusted brands that broaden access to knowledge, capital, and well-being by leveraging networks, platforms, and protocols.
Thesis 3.0 Examples:
SmartHop – Series A, 2021
Possible Finance – Series B, 2020
Helium – Series C, 2019
Stash – Series D, 2018
11. UiPath is the latest European Unicorn to go IPO. It is now a +$35bn business doing Robotic Process Automation (RPA). RPA is a software technology that makes it easy to build, deploy, and manage software robots that emulate humans actions interacting with digital systems and software.
Here’s a 3 min summary on the business and why it matters:
12. Odd Lots Podcast: John Hempton on Greensill, Archegos and What It’s Like To Short Right Now. I always listen when John is talking.
B. Lessons From The World’s Elite Money Managers
Ted Seides is the host of the well-known Capital Allocators podcast, and after doing many years of interviews with the best capital allocators in the world, he’s written a book discussing what he’s learnt from them. I’ve ordered mine.
He had a chat with Patrick O’Shaughnessy to discuss: Lessons from the World’s Elite Money Managers. Which I listened to 2.5 times.
Two things I wanted to share:
1. How to interview managers (or anyone) better:
a. Know the purpose of interview - what are you trying to achieve here?
b. Prepare for it - read the materials before you start
c. Know the right set up for what you want to accomplish - is it a walk, a zoom, a meal….
d. Asking open ended question. How, what or why and then shut up. Don’t try to be the smartest guy in the room.
e. Give feed back at the end and discuss it with them
2. The job of a Leader:
a. Leaders eat last. Put your people first. Great bosses are fans - what would a fan of your people do?
b. Take people to the promised land. This involves setting the Vision, holding people to high Standards, communicate the key messages regularly and inspire them.
A lot of other valuable stuff here on governance and how to run investment committees.
One of Ted’s recent interesting interviews was with Yen Liow of Aravt which dove deep into the world of Equity Long / Short.
Which was well summarised here:
Ted also had a great Crypto for Institutions series:
Crypto for Institutions: Eric Peters – The Macro Case for Bitcoin
Crypto for Institutions: Seth Ginns – Investing Beyond Bitcoin
Crypto for Institutions: Ari Paul – Exploiting Inefficiencies in Crypto Trading