Archive for April, 2018
Amazing people
Yesterday I went for a run on the west side highway with my wife Olivia. For those of you who don’t live in New York, the running path along the west side highway is on the Hudson River and there’s a beautiful park that goes from the tip of manhattan up to the George Washington Bridge. I’d guess hundreds of thousands of people run or walk or cycle there everyday.
As we were making our way south on yesterday’s run, a cyclist started riding alongside us as we ran, and he looked over to my wife and said “you are an amazing person.” She was taken back for a moment, and then we realized he had been riding behind us for a while and then it made sense. You see, when we run along the river, my wife will break off from our pace whenever she sees a piece of plastic or an empty water bottle…she’ll swoop down and pick up someone else’s garbage and run with it until we pass a trash can where she disposes of it and catches back up with me.
Olivia is a student of sustainability. She cares deeply about the health of our environment, and the thought of more plastic washing into the ocean is just too much for her to stomach…so she cleans it up…every time…without hesitation. Sometimes I wonder why I don’t help her…the answer is partly because my vision isn’t as good as hers, so she always spots the plastic first and zips off to get it, and partly it’s because while she is focussed on the well being of the planet and all beings that inhabit it, I’m in my head, thinking about whatever is going on in my life or my work…and I just am not conscious of it until she disappears from my side and reappears with someone else’s crumpled starbucks cup in her hand.
My wife is selfless. I interact with amazing people all day long. We all revere the people who found Ethereum or run Amazon as incredible…unique…one of one type people…but amazing comes in many forms…and I agree with the cyclist…my wife is unusual and unique and absolutely an amazing person. Somewhere along the way Olivia’s selflessness became so routine that I normalized it…that’s just who she is…but this unusual interaction with the cyclist on the path reminded me just how unusual and one of one and incredible she is. I guess you could say I’m married to the Jeff Bezos of selflessness…and I’m pretty proud of that 🙂
Read Full Post | Make a Comment ( None so far )Is this bear ever gonna hibernate?
I had a beer last night with a friend who has been instrumental in the formation of a number of well known blockchain protocols, and he asked me a question that I thought worth writing about. He basically said that we’ve been in a bear market for 4 or 5 months, and it reminds him of other bear markets in crypto (i.e. 2014-2016), and he was wondering if I thought this would be a similar duration to the prior, or if mainstream investors would buoy the aggregate market cap of crypto in the near term. My response, was that, despite recent runs, it feels to me like all participants in the ecosystem that are focussed on the here and now, have pulled back and will stay on the sidelines until some other catalyst pulls them back in. I don’t think the droves of new Coinbase and Robinhood users are going to take the price of Bitcoin from $8200 to $20,000. I also think that most of the crypto hedge funds that spun up opportunistically to capture LP demand are here and now focussed, losing money, and have pulled back in a similar way. I don’t see these cryptofunds driving the market into a bull scenario either.
So here and now thinkers have their foot closer to the break than the gas, but engineers, and builders, and venture capitalists in the business of investing on a 10 year time horizon are still flooring it…even more so than 6 months ago. This is almost certainly a more healthy dynamic for a nascent technology and ecosystem, and the investments that these longer time horizon participants are making, be they labor or capital investments, are undoubtedly going to grow the total value of this space on a 5-10 year timescale.
I think the here and now thinkers trying to time the next run should be looking more to institutional inflows to reverse a bear market…which is not a new idea. There has long been the narrative than institutional money is coming in as soon as custody and some other surrounding infrastructure problems are solved, and I think it was largely posited that those inflows would accrue to “large market cap” coins like Bitcoin and Ethereum. In practice, I think that shape of institutional money is still largely on the sidelines, while venture capital institutions represent the most significant institutional inflows to the space so far. Interestingly, venture capital is not flowing to large market cap coins because it’s very difficult to persuade LPs that venture managers are or should be in the business of buying public securities (or public non-securities depending on where you net out from a regulatory standpoint). Every top tier VC just got finished convincing LPs to let them buy tokens instead of equity, but surely they still must be in the business of proprietary access and early deal making. That requirement to “buy privately” and a requirement for funds ranging in size form $300M-$2B to put enough capital to work in any given investment to “move the needle”, has led to a clear bubble in what I’d call the “2nd presale” where hot projects are raising tens to hundreds of millions of dollars pre-float, at valuations that have not yet reconciled with the recent haircut in publicly traded tokens. Going forward, I expect these venture inflows to get more sophisticated and confident in how and where they build their ownership positions. I think the “2nd presale” will cool meaningfully and it’s likely that venture capital will accrue to publicly traded tokens going forward…it’s just not happening yet (with a few exceptions).
So I think that redistribution of institutional venture capital out of the private bubble and into a forward rationalized public market, if not already rationalized, coupled with the sovereign fund, pension fund, endowment type inflows that have long been posited, is the most likely path to the next bull market, at which point, as always, retail and mainstream investors will follow and amplify the run, and I have no idea on what timeframe that happens, but it feels at least a year out from now. X factors like geopolitical instability, public equity market corrections, government currency manipulation, and the like, I think are also reasonable candidates to catalyze another run, but it’s pretty hard to count on those events.
I am not a here and now investor, I’m not in it for a quick buck, I don’t actively trade crypto, and I have an incomplete view of the wall st side of this market, so take all this with a grain of salt, but high level it does appear to me that the right long term human and financial capital is flowing deeply into the crypto ecosystem, and therefore on some longer time frame, meaningful value is going to come out the other side. I would not want to be in the business of giving my LPs near term exposure to this space, because you are a genius one year and a complete flop the next, but I feel pretty good about assembling the right 5-10 year exposure. That’s how I’ve allocated my personal capital and it’s how I’d do it for others if they asked me to.
Read Full Post | Make a Comment ( None so far )Society is Breaking
This is a disorienting moment where society is reeling to adjust to significant contextual changes to the way things have been. Change happens all the time, driven by technology and regulation and capital markets and media and a host of other factors, but it doesn’t always happen at a layer that is fundamental to our concepts of self and reality. There are many implications of having a completely networked society, where information flows quickly and to far reaches, but perhaps the most salient is that we are not equipped to process the volume and velocity of what is coming at us today. That’s a narrative that you’ve heard for a number of years, as expressed by such concepts as internet addiction, but perhaps less talked about is our inability to process the transparency that comes with this data-abundent reality. It used to be that there was a set of things or premises that we could simply accept or take for granted, and another set that we knew were variable or in flux or unknown. With the base of what we could take for granted, the variable was processable to degrees. Today, however, people are reeling, in large part, because almost everything that we were blissfully ignorant to accept as true, is now in question. Everything is variable. There is no truth. And if there is no truth, certainly we can’t have a foundation of premises and beliefs that are static enough to process the variable. We can’t take it at face value that the government is stable. We can’t take it at face value that a publicly trusted figure is trustworthy. We can’t take it at face value that an article or an image or anything is as it seems. Everything is degrees of probability now. We see the bubbles we live in more clearly. We are aware of confirmation bias, what’s on the otherside of it, and increasingly the data and truths of that other side, and we can’t say for sure that things are the way they are anymore. These changes to how we see and understand the world are very low down in the stack. So many upstack systems, and social structures, and infrastructural elements, and applications, and products and services, are rooted in the notion that there is truth and that what most people believe to be true is…and when that belief is called into question or breaks, everything upstack breaks with it. I think this is the most disorienting moment in my 36 years on earth. I think we are all more disoriented than we even realize, and I think we are increasingly numbing this disorientation with pictures of our friends vacations and babies (and even those we are starting to understand don’t represent the truth of their lives). The good news is society tends to respond and reshape around big changes in context. It’s incredibly painful to those who lived in the old and now must transition to the new, but the out generations will develop different upstack systems to reflect the ambiguity and multifaceted nature of truth. As I watched the Zuckerberg senate hearing yesterday, all I could think about was this new reality, and how much people are suffering as they are forced to question that which they thought true. The upshot is that when systems break, and society responds, value tends to transfer from the incumbents of the old reality to the native products and companies of the new reality…and that’s a good thing for founders and entrepreneurs…if that’s any consolation.
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