[VIC – 155] Give me Libra, or give me death!

Business & Money

In investing you often hear the disclaimer, “past performance does not guarantee future results.” And I get why it exists. You don’t people making investment decisions solely based on the fact that performance has been strong in the past, without considering any other factors.

But, in reality, past performance does often suggest that things will continue to be good in the future. I’m a big believer that winners usually keep winning. The best teams in sports usually keep winning. The best artists usually continue pumping out hits. The best VC firms get access to the best deals. And the best companies often continue to grow and take market share. In fact, the “momentum” investment strategy is centered around this core idea.

It’s not a complicated idea to understand. Great companies attract the best talent, hoards of capital, and organic attention in the media. The success feeds on itself.

So don’t let the disclaimer fool. I believe winners keep winning and I cherish opportunities to add to my winners. #BTFD

Human Progress

“Give me liberty, or give me death!”

These famous words were uttered by Patrick Henry in 1775 before the Second Virginia Convention. In doing so he was making an emboldened declaration that the United Colonies should be liberated from the Kingdom of Great Britain.

Well, asketh and thou shall receive! It would be under one year until the Declaration of Independence was signed in July of 1776.

I stand (well currently sitting) here some 243 years later and would like to make a similarly bold proclamation.

Give me Libra, or give me death!

Ok, it’s not my proclamation, but that of Mr. Zuckerberg (Mark Zuckerberg, CEO of Facebook). And call me dramatic, but we may be at the dawn of an equally historic moment.

A couple of weeks back, Facebook pulled the curtain back on its foray into the world of crypto and financial services. The company will be launching a new cryptocurrency called Libra. Well, more accurately, Facebook, in association with 28 other leading companies around the world, has created the Libra Association, which will be the governing body of the Libra cryptocurrency and the underlying blockchain with the same name. In other words, the digital currency will not be controlled by Facebook alone, but rather by the association.

Pulled directly from the white paper (I recommend reading the entire document),

The world truly needs a reliable digital currency and infrastructure that together can deliver on the promise of “the internet of money.” Securing your financial assets on your mobile device should be simple and intuitive. Moving money around globally should be as easy and cost-effective as — and even more safe and secure than — sending a text message or sharing a photo, no matter where you live, what you do, or how much you earn. New product innovation and additional entrants to the ecosystem will enable the lowering of barriers to access and cost of capital for everyone and facilitate frictionless payments for more people.

So why do I believe that this might be a historic moment? First, let’s zero in on the phrase, “the internet of money.” As a corollary, think about what the internet did for the flow of information. In the 90s, many referred to the internet as the “information superhighway.” That is, the flow of information was democratized. Given you had a computer and an internet connection, it became trivial to publish and distribute information. You could freely communicate with anyone across the globe within seconds. If the printing press wrested power from the church, the internet wrested the same from governments, media conglomerates, and incumbent power structures.

The key thing to note here is that there was a wholesale shift of control from those that controlled the supply and distribution of information, to those that controlled demand. So when I read the phrase “the internet of money,” the thought is that the internet should do for money exactly what it did for information. Namely, create a fully open and democratized system that empowers more people. But I don’t believe we’ve seen for money what we’ve seen for information.

The obvious place to start, and the first place crypto bugs often look for a use case, is the underbanked and disenfranchized. If you live in a setting that has poor payment infrastructure or is ripe with government corruption, an internet for money would be an obvious step forward. Similarly, any locale that is vulnerable to wild currency fluctuations would be an obvious beneficiary of an internet of money based on a stable digital currency.

However, while the above point is an important one, many in the west won’t care. One of the most common questions I hear people ask is, “Why would I care living in the US? We have great payment infrastructure and a stable currency.” True and true. But I’ll highlight a few examples of where there is still friction in the payment system. If you have family in one of those vulnerable locales I mentioned above, sending money to your relatives is far harder than it should be and carries high fees. Traveling is another friction point. Over the last few months, I’ve spent time in France, Korea, and Japan. I often couldn’t download a local ride-sharing app due to lack of a local bank account. Not all merchants accepted cards, so I was often forced to use the local currency. That brought with it ATM transaction fees and, of course, you get gouged in the airport on the way home when you want to convert back to USD. If you want to start a company, you might look for bank financing or venture capital, which is out of reach for many. So, while we do have it good here in the US, friction points abound.

The second point I’ll point to here is the formation of the Libra Association. Here’s a screenshot of the association members at this point (Facebook has stated a goal of at least 100 members when Libra launches next year):

Many thought that Facebook would try to launch a digital currency fully controlled by Facebook itself, but that wouldn’t make a ton of sense given a core tenant of blockchain technology is decentralized governance. However, with fully decentralized systems like the bitcoin blockchain, there are massive drawbacks in terms of efficiency and scalability. Bitcoin bears love pointing out the fact that it can only handle 7 transactions per second and that governance is a nightmare, leading to forks and slow iteration. But you might say this fact is as much a feature as a bug. When transactions need to be validated across a large number of decentralized nodes, you get slow throughput and wasted energy. The polar opposite of a blockchain is centralized database owned by 1 company. So you get perfect governance (a consensus of 1) and no scalability issues (think about how many events [posts, comments, etc.] are processed every second across Facebook’s family of apps today).

So, in effect, Libra sits in the middle of those extremes. It’s not fully decentralized given the association has a relatively limited number of members, but gains from the efficiency of having a more streamlined governance structure and being able to leverage the computing resources of leading global companies.

Finally, digital currencies today have a limit on adoption given how hard they are to use. Exchanges don’t support every currency. You can’t transact in many places. To put it simply, the user experience is shit. Facebook has the ability to change that in a massive way. If digital payments and financial services become easily available within Whatsapp, Facebook Messenger, and Instagram, you instantly enable billions of users across the globe to leverage Libra across a whole host if different use cases (P2P payments, e-commerce, etc).

And this brings me back to a point a made earlier. Above I said, “the key thing to note here is that there was a wholesale shift of control from those that controlled the supply and distribution of information, to those that controlled demand.” What I mean by controlling demand is controlling the relationship with the consumer. Facebook owns the relationship with all of its users, so publishers and advertisers must play by its rules. (the same is true for Google, Netflix, Amazon, and Apple)

With the association, Facebook has fully embraced that they will not be allowed to control the supply and/or distribution of a global digital currency. And they don’t need to. They are making a bet that they will be best positioned to control demand. That is, they will offer the best user experience and easiest on-ramps to using the currency.

243 years ago, we got the founding of what is now (arguably) the world’s leading global superpower and the dawn of a new era. And, I imagine that, if you could have asked people what they thought at the time, no one knew it. I wonder if we are witnessing something similar today.

Philosophy

A few weeks ago I visited the mountains of Pennsylvania for a friend’s birthday. On one particular day, our group was in the car headed to enjoy a few rounds of paintball. The cell coverage was spotty in the area due to the remote location. As a result, the GPS would often update on a delay while searching for a signal. So as we were nearing our destination, I missed a turn because there had been no instruction to do so. A few moments later, I heard the all too kind GPS lady say “recalcualting,” and we were back on track in short order.

I point this out because I love when technology provides a good model for behavior. These days, it’s common for people to complain about all of the downsides of technology. Loss of privacy, misinformation, etc etc. But sometimes, when you pay attention, you find hidden treasures.

What I love about the kind GPS lady is that she never gets angry. She has one goal and one goal only, to get you safely to your destination. If you miss a turn, she simply adjusts to the mistake and provides a new route.

What’s interesting here is that we often do the opposite with the people we love most. We become frustrated or short-tempered when they make a mistake, and quickly forget that we want nothing but the best for them.

I point this out because I’m as guilty as anyone of doing this. I do it with my grandmother. I do it with my wife. I do it my dog.

I think we would all be well served taking a page from the GPS lady’s book on how to treat people, especially those we care the most about.

My Latest Discovery

My friend David recently played this song for me. Have you ever been having a conversation, but suddenly you can no longer focus on the words swirling around you because the beat was too intoxicating? That’s what happened to me while this one was pulsing through the speakers. Do yourself a favor and give it a spin ASAP!

[VIC – 154] Do you use the same password for every website?

Have you heard the Slack story? Stuart Butterfield and his team were working to build a gaming company. The team needed a system to easily communicate and collaborate, but one that also integrated with all the other apps and services they were using. So they built Slack to address that need. Before long, they realized the gaming company wasn’t going anywhere, but that the team loved using Slack. So they pivoted to focus solely on that. The rest is history.

Similarly, my partner Jake and I have been working together for about a year and a half to build a software company focused on knowledge sharing. The company is called Vectr, and the idea is to better facilitate the flow of information across groups of people by empowering individuals to ask important questions. But this post isn’t about Vectr.

In building the company, we’ve run into a challenge that I imagine most (if not all) startup companies face. In building software, you end up using a whole host of different products and services as part of the development process. We use AWS for compute and storage, Heroku for app development, Stripe for payments, Chase for banking, and many others. So, the question we faced was, how do we effectively keep track of and share access to all of these accounts between the two of us?

This trend & challenge is equally present with regards to personal accounts. The other day I set a timer for 60 seconds and tried to make a list of all the different apps and websites I use. I came up with 65, and that only includes the ones I use regularly!

The early solution we came up with was simple. Use the same simple password across everything (I know 😂😂 two Einsteins over here)! I’ll refrain from elaborating on why this is a terrible approach given that you, dear reader, are smarter than we are.

Realizing we were being foolish and irresponsible, Jake and I sat down one evening and came up with a short list of ways we wanted to improve the way we manage our online identity as a company.

  1. Passwords must be unique across every service we use.
  2. Passwords must be virtually impossible to guess.
  3. We will rotate passwords for core services once per quarter.
  4. We’ll never write down passwords (on paper or digitally).

From there, we started to explore the existing solutions on offer.

At the low end of the market (with regard to complexity, capability, and cost), we came across password managers like LastPass and 1Password. We tested both, and to be honest, they work well. But they don’t fully integrate and enforce the principles we described above. If you log into a website and use the word “Password” as your password, these services will offer to save it. In fact, if your password is “Password” for every site and app you use, that’s perfectly acceptable to them. We wanted to find a solution wherein behavior like this is not an option.

Further, and perhaps this is the hippie iconoclast coming out in us, we didn’t love the idea of getting in bed with one company for something so important. What happens if their website goes down (Facebook, Slack, and Amazon Web Services have all experienced 12+ hour outages during the last year during which you could not use their services)? Then, of course, you have scarier things like hacks, data leaks, or companies storing passwords in plain text and unencrypted environments (cough, Facebook, cough, Google). So, we wondered if a more decentralized approach might make sense. (no blockchain talk today, I promise 😇).

At the high-end market, you have enterprise-grade identity management solutions. And while incredibly robust, the cost and complexity make these infeasible solutions for individuals and small teams.

After a few weeks of research, we couldn’t find what felt like the right solution. We just wanted to solve this challenge and be done with it. And what do you do when you can’t find what you want? Correction, what does Jake do when he can’t find what he wants? He builds it! And like the Slack story, we’ve absolutely fallen in love. At the start, we focused only on our most critical business apps. Then we added everything else. From there, because it was so easy to use and, to us, so valuable, we each started using it personally. I now manage 56 different accounts in one easy-to-use interface.

Naturally, we then told the women in our lives about it and they too fell in love. Now they both have their own accounts and are using it daily.

So, why am I telling you all this? Well, given how much value we take from the service, we thought other people might also find it valuable. So now we’re planning to roll out a limited beta to a small number of people to test the service and provide feedback. That’s where you come in! We’re hoping a small number of you (living in NYC) will join the beta! Anyone interested?

What’s in it for you? We’re planning to host a small “launch party” at my apartment in a few weeks and would love to have you there. We will, of course, give you food, drink, and a good time! We’ll spend about 20 minutes talking about the service, then I say we just kick back and get weird!

The total number of people will cap at 10, so don’t sleep!

What do you say??

[VIC – 153] I’ve lied to many of you for years 😔

Business & Money

A couple of weeks ago I was on a plane preparing for takeoff. As I set there in my seat, there were a few investment ideas swirling around in my head as the flight attendant droned in the background about oxygen masks. As I gazed out the window thinking about how I might reduce some risk in my portfolio (I’ve been shifting from growth toward value as valuations have continued to climb), there was a thunderstorm brewing on the horizon. There were horizontal lightning strikes flashing through the sky which I found remarkably beautiful.

The mix of lightning strikes and thoughts about risk reminded me of an analogy I heard a while back. I don’t remember exactly how it went or where I heard it, but I’ll do my best to convey the gist.

In a lightning storm, there is a chance that a specific lightning strike will ignite something on the ground and lead to a fire. Californians know this all too well.

But risk is not the probability of a lightning strike on a specific place. Rather, risk is better characterized by the amount of dry plant matter on the ground. When there is little dry plant matter, the probability of a lightning strike leading to a fire is fairly low. By contrast, if you have an extended period of drought, leading to the accumulation of dried plant matter, the chance of fire resulting from a lightning strike becomes far greater (irrespective of where the strike happens).

Equate that to today, and I’d say we have a lot of dried plant matter laying around. Political unrest at home. Political unrest abroad. Lofty valuations in public markets. A global bear market (with the exception of the US). Extremely low interest rates, meaning the Fed doesn’t have a ton of recourse to act should they need to. Inverted yield curves. And on and on and on. So I believe we have elevated risk levels.

As a result of the heightened risk, I’m playing a lot more defense than offense at the moment. My cash position has risen to 33% from around 15% a year ago. Add another 7% of what I’ll call extremely safe bets (GLD, BRK.B, MKL, DIS, AAPL, GOOGL). And of what remains, I’m putting more emphasis on healthy balance sheets, consistent earnings growth, and profitability. Don’t get me wrong, I’m still a techno-optimist and still own a number of growth names (ETSY, TTD, MELI, SHOP, TDOC), I’m just not adding to those names at the moment.

Human Progress

The web browser was an incredible thing for innovation and technological progress. Before it came onto the scene, Microsoft ruled the world because it controlled the operating system. And due to that control, app developers basically had no choice, but to develop apps on the windows OS. To develop for a different operating system was to severely limit your chances of reaching tons of end users and thus building a business of any significance.

But the browser changed that. It meant that it didn’t really matter what type of hardware you purchased and what type of OS came pre-installed. It leveled the playing field. As long as someone had an internet connection and a browser, they could access web-based applications. This state of affairs allowed for companies like Amazon, Google, Ebay, Facebook and many others to thrive and wrest some power from Microsoft (the fact that Microsoft is once again the most valuable company on the planet notwithstanding).

Keep this in mind as we slightly change topics. We’ll be circling back to the browser and its significance.

Many of you know that I’m currently working with a friend to get a software business off the ground. And part of that equation involves a mobile strategy, given that mobile is taking an ever-increasing share of web traffic. And if you’re in the US, that means ensuring that your software shows up in the Apple App Store if you want to ensure easy access and maximum distribution.

If you’ve ever tried to publish an app to the App Store, you’ll know that it must go through a review process. An unbeknownst to many, this is a human review process wherein every app is reviewed by a human being. And broadly, I’d say this is a good thing. Apple is playing a gatekeeper role to protect consumers by ensuring that malicious software doesn’t make it into the store. But there’s also a downside. If you operate a company and you compete with Apple, your apps must also go through this review process. And not only does Apple get to review the apps, they also take a 30% cut of your revenues for providing this service.

This situation lies at the center of Spotify’s recent complaint against Apple filed with the European Commission. Spotify is suggesting that Apple is engaging in anti-competitive behavior because 1) it claims that Apple frequently rejects its app upgrades (degrading its customers’ user experience), and 2) Apple takes a 30% cut of Spotify’s revenues. It’s not that the 30% cut, in and of itself, is a bad thing (remember, the role that Apple plays as a middle man has value). But rather, Spotify’s main competitor is Apple Music. So given that both Apple and Spotify must pay a huge portion of their revenues to music labels and artists, as they should, to allow Apple to then take an additional 30% of revenues from Spotify does not leave them with much capital to operate the business, market to new customers, and the like. Thus, Apple has an inherent competitive advantage.

But let’s come back to the power of the web browser. It seems many developers these days are opting to build what are known as “progressive web apps,” as opposed to native mobile apps. From Wikipedia:

Progressive web applications (PWAs) are web applications that load like regular web pages or websites but can offer the user functionality such as working offline, push notifications, and device hardware access traditionally available only to native applications. PWAs combine the flexibility of the web with the experience of a native application.

There are a couple of important things to note about PWAs (likely many more, but I’m not a developer).

First, you usually install them by navigating to a company’s mobile site. When you land there, you get the “add to home screen” dialog box. This adds an icon to your phone’s home screen so it appears just like any other app. But importantly, you have circumvented the App Store and thus don’t have to give up any of your revenue to Apple.

Second, from a development standpoint, things are far more simple. You develop one PWA that works for every browser, OS, and device type. So you don’t have to worry about developing an Android app, iOS app, lengthy review processes, and accounting for older device models that only support older versions of the OS.

For these reasons, my technical co-founder has opted to build a PWA for our mobile experience. Makes a ton of sense to me.

So again, it seems the browser may be playing a key role to level the playing field and wrest power from the giants (the fact that the leading browsers are owned by the giants notwithstanding). And I think that is a good thing that will ultimately lead to more innovation and more competition.

Philosophy

I’ve been meaning to write about something for a long time. But I haven’t done so out of fear and shame. But reading The Gifts of Imperfection by Brene Brown has illuminated the fact that embracing shame and vulnerability are what courage is all about. So it’s time to get this weight off my chest.

To put it simply, I’ve lied to many of you for years. I feel terrible about it and it’s time to put an end to the lies.

Up until age 18, basketball was a big part of my life. I wasn’t some superstar athlete, but I took the sport seriously and was confident in my ability.

But that all changed when I went to college. There were a number of schools (primarily division 3s, a handful of division 2s, and one division 1) that recruited me aggressively and where I could have attended on a full ride and continued to have basketball play a major role in my life. But when I visited New York City, I was enthralled by the lights and the energy. I was spellbound. Smitten even. She had me before she said hello. 🤤😍🤩🤪

In other words, NYU was a no brainer. The fact that it offered a top 5 undergraduate business program was just a cherry on top.

Unfortunately for me, I wasn’t good enough to make the team. Plain and simple (I think this is the first time I’ve set this aloud to myself or written it down). But for a long time, I embraced a multitude of excuses.

First was the fact that the coach that “recruited” me was nowhere to be found when I arrived for freshmen year (still unsure if he left or was fired). I put recruited in quotes because I don’t want to embellish the facts any longer. I received a few recruiting letters and went on an unofficial visit to meet the team, but nothing glamorous.

Second was the fact that the head coach favored a “different style” of basketball. There weren’t many black guys on the team and shooting threes seemed more important than getting out in transition or playing the pick and roll. But again, just another excuse.

I just wasn’t good enough and the team was not in need of another guard.

And not only did I not make the team freshmen year, I again tried out sophomore year and didn’t make the cut. I largely kept this a secret to avoid the embarrasment of telling people about it, then failing.

At the time I didn’t make a big deal about it or spend much time reflecting. The story I told myself was that I would have more time for partying and more time for studying.

But the reality is that this was one of the biggest failures and disappointments of my life. And it was a huge blow to my confidence and my feeling of self-worth. So much so that I’ve lied about it ever since. To this day, many people believe that I played basketball in college (because that’s what I told them). For those closer to the story or with a better chance of finding me out, I told them I played, but got hurt early in my collegiate career and thus decided to focus on my studies. I wouldn’t be surprised if there are a couple of other fabricated versions of the story floating around that I no longer remember.

But long story short, lies, lies, and more lies. I lied because I was ashamed of my failure and have always struggled to embrace vulnerability.

I’m writing this to apologize for all of the lies and to take a small step toward better dealing with shame.

My Latest Discovery

If you subscribe to AT&T as your wireless carrier and you have an unlimited data plan, it includes free access to one premium entertainment service. The options include HBO, Cinemax, Showtime, Starz, Amazon Music Unlimited, or Pandora Premium.

I chose HBO. Duh! 😉

[VIC – 152] To infinity and… Bed, Bath, & BEYOND!!!

Business & Money

4 years ago, Fred Wilson said,

“The lesson I’ve learned in my career is to invest into the post-crash cycle. When you do that, and do it intelligently, you are rewarded greatly.”

Let’s point to a few things that are crashing or in the post-crash phase:

Retail

Bitcoin

China

Today, let’s talk about retail.

Thing one, retail is not going away. It will undoubtedly change and evolve (those that stagnate will die), but brick and mortar retail is here to stay.

One retail stock I’ve added to my watch list is Bed, Bath, & Beyond (BBBY). To be clear, I have not purchased any shares to date. It’s impossible to time the bottom on any out-of-favor asset and, as such, I like to see positive momentum before making any purchases. But there are a few reasons I find BBBY interesting.

The first thing is that, while the stock has lost 77% in the last 5 years and profits have decreased by a similar percentage, revenue is slightly up over the same period. And when I read the earnings releases and annual reports, that decrease in profits seems to be due to an increase in SG&A expenses. So you have to dig a bit deeper.

Second, the balance sheet looks fantastic and seems to be getting better still. Inventories are down. They’re closing underperforming stores. The cash position is up to over $1B (market cap of $2.3B). And management is buying back shares at the right time, when the price is low (as opposed to tons of companies buying back stock these days at astronomical valuations).

Third, the company is making strategic investments in its future. Capital investments are up and the bulk of that is related to technology and digital transformation. They’re releasing private label brands. They’re redesigning stores and rethinking merchandising strategies.

Now, don’t get me wrong. This is not a high growth business and will likely never be. But the company appears to undervalued, and perhaps significantly so.

Human Progress

A few weeks ago, while I was in Vegas, I enjoyed a few Impossible tacos at a restaurant. They were Impossible because the “meat” is produced by Impossible Foods (I wrote about them in VIC 100).

What I found interesting was that the Impossible tacos were more expensive than all the other tacos on the menu. So in my head, I’m like, “why is that?”

Think about it. Beef is generally more expensive than chicken becomes it’s more expensive to produce. Cows require more land, more food, more water, and basically more everything as compared to chickens. So the cost difference makes perfect sense.

If Impossible Foods claims to require far fewer inputs to make their meat substitute products, why the higher price?

It could be the fact that they’re far smaller than the big meat producers and thus not operating at scale. Or, this could have more to do with marketing (price as a signaling mechanism).

But if the claims are true about production, intuition and market mechanisms would say prices should come way down over time. And that’s important because they won’t win on moral grounds. People may claim to care about animal welfare and environmental impact, but history says they care more about price and other tangible benefits. So the products will need to be cheaper or taste better, or some combination of the two.

It reminds me a bit of whales (bear with me for a moment 😂).

We used to kill tons of whales for blubber and fuel. And there was always a small contingent of people that said this was morally wrong. But that didn’t matter. Whales kept dying. We didn’t stop murdering the whales until we found an alternative fuel source, namely kerosene.

Products always need to compete on their own merits. And if you can sprinkle a bit of morality on top, all the better.

Philosophy

On Thursday, I enjoyed my monthly meeting with Excelsior (a Latin word translated as “ever upward). It’s a group of 8 great friends wherein we choose a book to read together for the month and spend the time to dive into the text and how it relates to our lives.

We kick off every meeting with life updates, wherein each person spends 5-10 minutes updating the rest of the group on something important to them (sometimes these go a good bit longer, but we’re intentional to let these run when it feels right). Sometimes people recount a compelling line of poetry, sometimes people celebrate a promotion or moving on to a new opportunity, sometimes we talk of the women in our lives, and other times about interesting investment ideas that have captured our attention.

One update this past Thursday included the mention of one member enjoying a sober February. He described how he didn’t miss the drunken nights out one bit and felt refreshed.

On my Uber ride home, I was thinking about what he said when a new phrase popped into my mind (turns out it wasn’t so new). You often hear about FOMO, or the “fear of missing out.” But the phrase that popped into my mind was JOMO, or the “joy of missing out.”

I then did a quick Google search and it turns out that I wasn’t the first to come up with JOMO. One search result yielded a beautiful poem that I thought I’d share with you all this evening:

JOMO (The Joy of Missing Out)

–By Michael Leunig

Oh the joy of missing out.

When the world begins to shout

And rush towards that shining thing;

The latest bit of mental bling–

Trying to have it, see it, do it,

You simply know you won’t go through it;

The anxious clamoring and need

This restless hungry thing to feed.

Instead, you feel the loveliness;

The pleasure of your emptiness.

You spurn the treasure on the shelf

In favor of your peaceful self;

Without regret, without a doubt.

Oh the joy of missing out.

My Latest Discovery

A few weeks ago my wife and I were roaming around the Midtown East area of New York City. When it came time for her 3 pm doctor’s appointment, I was left alone with about an hour and a half to kill.

I stumbled across a jazz bar called Fine & Rare and decided to check it out. And I’m so happy I did! The music was somehow relaxing and energizing at the same time, and the whiskey selection was exquisite.

So I sat down at the bar, ordered a Lagavulin 16, and enjoyed about 50 pages of a book called The Social Singularity.

Quite a lovely afternoon!

[VIC – 151] F*** the golden rule!

Business & Money

I love the following parable that Howard Marks included at the end of his latest memo.

Suppose that every day, ten men go out for beer, and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes (by taxpayer decile), it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.

So, that’s what they decided to do.

The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you’re all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten men would now cost just $80.

The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six? How could they divide up the $20 windfall so that everyone would get his fair share?

The bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to suggest the new lower amounts each should now pay.

And so the fifth man, like the first four, now paid nothing (a 100% saving).
The sixth now paid $2 instead of $3 (a 33% saving).
The seventh now paid $5 instead of $7 (a 29% saving).
The eighth now paid $9 instead of $12 (a 25% saving).
The ninth now paid $14 instead of $18 (a 22% saving).
The tenth now paid $50 instead of $59 (a 15% saving).
The first four continued to drink for free, and the latter six were all better off than before. But, once outside the bar, the men began to compare their savings.

“I only got a dollar out of the $20 saving,” declared the fifth man. He pointed to the tenth man, “But he got $9!”

“Yeah, that’s right,” exclaimed the sixth man. “I only saved a dollar, too. It’s unfair that he saved nine times more than me!”

“That’s true!” shouted the seventh man. “Why should he get $9 back, when I got only $2? The wealthy get all the breaks!”

“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”

The nine men surrounded the tenth and beat him up.
The next day, the tenth man didn’t show up, so the other nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important: They didn’t have enough money between all of them for even half of the bill!

And that’s how taxes work. Tax breaks, quite naturally, flow to those that already pay the highest taxes. Raise rates too much, they get more creative (find loopholes) and take their money elsewhere.

Human Progress

In many (perhaps most) fields, veterans have stark advantages over rookies.

Sometimes the difference is structural. If you want to be an elite lawyer, doctor, or politician (is elite politician an oxymoron?), you simply have to put in your time and pay your dues.

Sometimes it has more to do with experience. Years in the trenches help you more readily recognize patterns and make better decisions.

But I love technology because it does not follow this model. If you come up with a novel new technology or business model, and you are adding real value for your customers, you can do well with almost no experience. It’s pretty 🍌🍌🍌!

Think about when Netscape first rolled out the web browser. At the moment, rookies and veterans were indecipherable because the web browser was brand new for everyone.

The same thing is happening in crypto right now. There are high school seniors that are more adept at building decentralized applications on the blockchain then software engineers that have been working in their field for decades.

In technology, it almost pays to be a rookie, at least in the earliest stages of building something new. It’s the only way to truly think from first principles.

(of course, adult supervision can be a great thing when it’s time to scale)

Philosophy

You’ve likely heard of the “golden rule.”

Treat others how you want to be treated.

To me, it made a ton of sense for a long time. Why would you do something to someone else if you wouldn’t like it done to you? Pretty straight forward.

But when you think about it more closely, the golden rule is ridiculous. In fact, I’d venture to say it encapsulates much of what is wrong with humanity. At the core, people are selfish individuals that can’t help but see the world from a first-person perspective. “Why wouldn’t everyone want to be treated like I want to be treated? After all, my views are right and true and pure.” 🤣

The reality is that people are different and have very different views about how they’d like to be treated. When I get frustrated, I like to be left alone. Quiet time and isolation are my preferred methods for reflection and introspection. Other people want to be comforted and asked if everything is ok. So to treat that person like I want to be treated is to neglect their emotional and psychological needs.

Lucky for me, my coach recently made me aware of the “platinum rule.”

Treat other people the way they want to be treated.

Makes FAR more sense!

My Latest Discovery

If you haven’t been to Koi in Bryant Park, do yourself a favor and go check it out! It’s a tad pricey, but the food is on point. Especially the crispy rice with spicy tuna!

[VIC – 150] What made you think you could get a Tiger??

Business & Money

A couple weeks ago, the world lost John Bogle, the founder of Vanguard. For the unaware, Vanguard is the largest provider of mutual funds in the world and the second largest money manager when measured by assets under management.

But Bogle built Vanguard in an unusual way. To explain, let’s contemplate an unrelated industry for a moment.

In the energy industry, many investors focus their attention on the new shiny thing. They want to be involved in renewables, shale, battery technology and the like, all of which are exciting.

But from my perspective, the most exciting thing about the energy industry has been the massive efficiency gains. A 2019 Chevrolet Suburban has better fuel efficiency than a Ford Taurus from 1989. That’s an incredible leap in efficiency. If we get a similar gain in the next 30 years, and can keep fuel prices low, the transition to clean energy might be slower than anticipated.

Similarly, if you think about how to beat the market over the long term, you have 2 options:

You can outsmart other investors by timing the market and/or coming up with new and esoteric ideas.

Or you can aim for efficiency gains by spending less and saving more. (one of Bogle’s famous lines: “In investing, you get what you don’t pay for.”)

Bogle did the latter. He cut out brokers (and their massive fees) and sold funds directly to investors. And he sold these at cost so investors could keep more of their returns. And as a result of those lower fees, Vanguard funds outperformed the majority of asset managers.

And, of course, Bogle got extremely wealthy along the way, though not as wealthy as you might think. While the head of Fidelity is worth an estimated $7.4 billion, Bogle died with $80 million. And I think that’s because Bogle was more focused on his mission and less influenced by ego and greed.

Human Progress

I’ve written on this blog many times about the power of words and language. And I feel a need to return to the subject today. That’s because I keep reading about the concept of a “universal basic income”. I find both universal and basic to be troubling in this context.

I guess universal is being used here because, while the current welfare system is aimed at helping the very poor, the idea is that universal would mean that everyone would receive this benefit regardless of their financial position. But in reality, a word like national might be a better fit here given that any policy would be constrained by national borders.

More troubling for me is “basic”. This might be one of the most subjective words in the English language. Does basic mean access to a shelter, electricity, and running water? Does it also include access to healthcare? Does that healthcare just mean emergency healthcare, or does it extend to preventative care? What about access to contraceptives and reproductive health? And what about education? Would a basic income stop at elementary or high school? or perhaps it includes enough to cover a 4-year undergraduate degree?

These are big questions with big implications. And ones that are not served well by the use of ambiguous short-hand.

Philosophy

On Tuesday I was heading home from work while enjoying a podcast. While I was traversing the subway station toward the relevant platform, I began searching the Apple podcast app for the next episode that I would enjoy after the current one. I guess I was a bit nervous knowing that I would lose service in the next couple of minutes.

But the funny thing was that I was only 20 minutes into an hour-long episode. And a very good hour-long episode at that. And the ride home from the Bryant Park station is perhaps 6 minutes at most. There was virtually no chance of cell service becoming an issue during that brief window.

So I rewinded the current episode about 60 seconds to before I became distracted, locked my phone, put in my pocket, and continued peacefully on my way.

It’s so easy to become fixated with the next thing when the current thing hasn’t even run its course. It’s just like that old saying of thinking about those proverbial birds in the bush while ignoring the one you’re already holding.

My Latest Discovery

If you’re in need of some entertainment this week, check out this Mike Tyson interview by Joe Rogan a couple weeks ago. And if you’re strapped for time and only want to watch 2 minutes, I’d recommend starting around 11 minutes and 45 seconds when Mike answers the question, “What made you think you could get a tiger?”

[VIC – 149] Mountain climbing 🧗

Business & Money

Gold (and other precious metals by extension) is an interesting asset. Normally, when I make an investment, I want to make money from that investment. And that can happen in a number of ways.
A stock might appreciate if the company experiences earnings growth or perhaps you’ll make income from dividend payouts.
If investing in debt, I hope for yield in the form of interest payments.
With real estate, the income comes in the form of rent.
None of the above is true for gold. You might say it is a nonproductive or non-income producing asset. You only make money if someone is willing to pay more for it at a later date.
That said, there is a flip side to this story, and a powerful one to boot.
Gold is often referred to as a safe haven asset in that people flee to it in times of uncertainty. I imagine this is due to a long history of gold as a store of value. We no longer have the gold standard, yet every central bank on the planet stores hordes of it in their vaults.
I think this story points to investor behavior and investor psychology more than anything else. When people are afraid, they buy gold because it feels safe. And behavior/psychology is likely the most powerful force at play in markets.
I say all of this because I’ve been steadily increasing a gold position in recent months (this is not investment advice). And that’s largely because it seems to be that people are afraid and uncertain. I myself have a hard time not being an optimist. But the masses seem less optimistic about the future. So it feels like a solid trade for now.
The last thing I’ll say here to ensure that you all understand that I’m a novice when it comes to gold and precious metals, is that I’m a novice when it comes to gold and precious metals. This trade is purely based on a mental model wherein human beings are largely irrational actors in the market (perhaps also on the fact that a few people I follow closely share my belief). So given my lack of experience in this realm, I have a stop loss order that will automatically sell the gold (GLD) if it crosses a certain threshold in order to cap my downside risk in what is broadly a poor performing and very volatile asset class.

Human Progress

When I woke up on Saturday morning, I decided to kick off the day by reading the Axios China weekly newsletter. You can see a screenshot below of the beginning of this week’s edition.
I find the bottom portion of the intro (beginning with “And, if you want a daily…”) to be very interesting.
Axios is a media and entertainment startup that launched a couple years ago with a unique strategy centered around email newsletters (I love the email newsletter medium, in case that was unclear). At launch, they brought together many of the top email newsletter publishers (individuals, not companies) into one organization. The first was Dan Primack of former Term Sheet fame, then quickly followed by Bill Bishop who writes the acclaimed Sinocism China newsletter.
The interesting thing to me is that Bill didn’t stop writing his own newsletter when he joined Axios. So he continues to publish Sinocism China daily, in addition to his duties publishing Axios China every week.
This is an interesting and unique strategy. Axios allows Bill to promote his own newsletter at the top of Axios China, and I’m assuming Axios China gets additional reach from Bill’s existing readership.
This is in contrast to the way that most publishers operate. Typically a publisher cares about the promotion of its own brand above that of any individual contributor. But Axios empowers Bill, Dan, and many others to continue building their own brand in parallel to helping to build Axios. I love that idea.
If you think about the rest of the media and entertainment business, this approach runs in direct opposition to the way things normally work. Take musicians for example. The big labels control the industry and take most of the profits, while individual artists are often taken advantage of and spit out by the system. Can you imagine a world wherein an artist could use the resources of a label to promote their own music without a label getting a cut of those sales? Unfathomable!
The same is true in sports wherein most athletes shortly go broke shortly after their careers while owners and GMs continue to clean up.
How fantastic would it be if Axios represents the beginning of a trend toward decentralization in media and entertainment, if creators were fully empowered to flourish without having their legs cut out from under them by corporate interests?
I’d love to live in that world!

Philosophy

I was at dinner with my great friend and business partner a few months ago when he posed an interesting question.
“How many mountains do you think there are in the world that have never been climbed?”
It was less a literal question and more a philosophical one. He was pointing out the fact that it seems that there are so many people interested in climbing Mount Everest or Kilimanjaro, mountains that have already been climbed by tons of people. Meanwhile, there must be hundreds, or thousands, or perhaps tens of thousands of peaks that have yet to be conquered.
It’s a difficult question and one that likely lacks a definitive answer. To my knowledge, there is no centralized database which catalogs all of the peaks in the world and a record of which ones have been climbed and those that have not.
But more importantly, the conversation surfaced what I think is one of the key reasons that we work well together and invigorate each other so. We both have a burning desire to climb mountains that have yet to be climbed. We want to place a flag atop a summit as the first visitors. And we will not rest until we do so, or at least die trying.

My Latest Discovery

There are a lot of interesting things going on in the financial technology space. One that I want to learn more about, but haven’t yet gotten the chance to read up on, is the prepaid debit card space. Companies like Green Dot are killing it (up 223% in 5 years). I imagine they are leveraging technology to serve a massive and historically under-served market in those that have poor credit scores and limited access to lines of credit. But more to come on this (perhaps a dedicated business & money segment in the near future).

[VIC – 148] An orgasmic mouth explosion of deliciousness

Business & Money

One of the things I like to do when I become sufficiently curious about a company is to buy a few shares. Nothing material, but perhaps $50 or so. I feel more compelled to do research when I have a tiny bit of skin in the game, so you might think of it as a sort of forcing function or education tax. (this wasn’t possible before companies like Robinhood because every trade cost you $4 – $7)
One of the companies that I did this with a while back was Lending Club (LC). I like marketplaces in general, specifically wants where demand regularly outstrips supply. And it seems consumer credit would fit that bill.
But when I started to dive in, I couldn’t find anything special about the business. They don’t appear to have access to any proprietary data that might allow them to recover loans at a higher than average rate. In fact, they seem to have less data than other financial institutions would. And marketplaces are all about the use of data to increase the value to both the demand and supply side of the value exchange.
And more importantly no network effects. I guess you might say their ability to asses risk gets better over time, but it feels like we’re squinting here.
So I unloaded the shares. And I’m glad I did. The company has performed abysmally.
But speaking of access to proprietary data, one company that I am excited about is Square (SQ). Yep, the company that started out making those little white card readers that would plug into a smartphone allowing anyone to accept mobile credit payments.
A while back I bought a few shares and started down the research path. After scaling the card reader business, the company moved into creating a simple POS system (both hardware & software) for small businesses that you often see in coffee shops and retail boutiques. And that meant they now had access to proprietary transaction data (😍) for tons of small businesses. So the logical next step from there was to launch a new segment of the business called Square Capital wherein the would make small business loans to their customers.
So when the stock recently took a 50% haircut,
it felt like a great entry point for me and I decided to increase my position size. And to be clear, the shares are still fantastically expensive by traditional valuation standards, but companies like Square will always be expensive.
Gotta love that proprietary data!

Human Progress

I imagine that Google must have the largest repository of data and information on the planet. That is, of course, a very profitable position to be in. But also a seemingly precarious one.
In the west, we enjoy an open and largely unregulated internet. And I think that, for the most part, that is a good thing. It allows for free speech, the unfettered flow of information, and permissionless innovation. But it is also a significant attack vector.
The US enjoys a dominant (though perhaps shrinking) position on the global stage in many ways. Economically and militarily, we are unmatched. But due to the nature of the open internet, our opponents can walk in the front door and basically do whatever they want.
So coming back to Google, they must be square in the crosshairs of any bad actors. They hold the keys to the kingdom.
I bring this up because we are hearing a lot of late about the “tech-lash.” That is the cultural, social, and political backlash against the large technology companies that control the consumer internet. But much of the conversation seems, to me, to be focused on the wrong things.
Sure, “fake news” and bots are problems. Sure, algorithms can be gamed to get more distribution of divisive content. Sure, Google should pay more taxes and avoid anti-competitive behavior. And from a regulatory perspective, perhaps breaking up Google and forcing the different business lines to operate as standalone businesses might bring some small benefit to the technology industry broadly. But again, I’m not sure we’re focusing on the right things.
What worries me is thinking about an aggressive cyber attack against Google. That could take many forms, but if something like that were even remotely successful, I’m not sure we can even fathom the implications.
So we have one company controlled by a small group of people, with a couple hundred thousand employees and finite resources, that is likely under constant attack by all sorts of adversaries (both state and non-state).
So I think the thinking here needs to be completely orthogonal to traditional models of corporate governance and regulation. It’s less about monopolistic tendencies or consumer welfare, and more about protecting the most valuable resource known to man.
And as usual, I have far more questions than I do answers. Should Google just become a 4th branch of government, the information & technology branch? Should they be subsumed into the executive branch with the full backing of the Department of Defense? Do Google services just become utilities? (is that not already the case, for all intents and purposes)
I’m not sure, but one thing is clear. You know that saying that goes “this time is different,” when in fact this time is never actually different? Well, THIS time is different. I don’t believe the internet is just another technology like electricity or the internal combustion engine. The rules are fundamentally different. And therefore, we may need some fundamental changes to the way we organize and govern ourselves.

Philosophy

I was recently doing some reading about cliches and how they are often inadequate descriptors of what they describe. When you use the same word or phrase over and over to describe a wide variety of occurrences, those occurrences lose their unicity and any special character.
So I began to think about what words or phrases I use most and one that came to mind is the word “dirty.” When listening to trance or deep house, subsets within electronic dance music, I will often refer to a song as dirty. But if so many songs are dirty, how is one any different from the last?
Another way to describe the meaning of dirty is to think about the word disgusting. Think about a time when you tried a new dish or food item that you strongly disliked. You might say it was disgusting and you may have also made a grimacing face as you encountered the off-putting taste or texture. Now imagine that same reaction but with the emotion flowing in the opposite direction. Imagine you try a new dish and you grimace harshly and sit back at the sheer goodness of it. It’s almost unfair to other foods that something could be this good.
That’s what I mean when I say a song is dirty. It’s just disgustingly good. But I might be better served in the description to describe it slightly differently each time to best convey the emotion or feeling and that particular moment.
More broadly, there are so many other cliches that we regularly use that rob human expression and experience of its vitality. So I’ll be making a small effort to bring some of it back, at least in my own small corner of existence.

My Latest Discovery

If you’ve ever made cookies at home, you know you have to eat a bit of the cookie dough when you finish with the mixing bowl. After all, it’s simply the right thing to do. But if you’re anything like me, you’ve likely gone overboard on a few occasions and ended up with a stomach ache from the raw eggs. If only there was another way.
For a long time, the only other way was chocolate chip cookie dough ice cream (nom nom 😍). It’s maybe 90% vanilla ice cream, 8% cookie dough, and 2% chocolate chips. So not bad, but doesn’t quite get you all the way to cookie dough heaven.
Well, a couple weeks ago Hana and I were wandering around (ok maybe we were hunting down yummy treats) West Village when we stumbled upon DŌ, Cookie Dough Confections. It’s a desert spot where the cookie dough is completely edible. You can enjoy a variety of flavors of cookie dough on their own, or have it mixed into ice cream or other treats. I had one scoop of chocolate chip cookie dough and one scoop of sugar cookie dough and both were magical. You might think about all of those tiny one-off moments when you’ve had a small morsel of cookie dough, and roll them all into one orgasmic mouth explosion of deliciousness.

[VIC – 147] You have got to be kidding me!

Business & Money

When you buy a stock, or take a long position, your maximum downside is your initial investment. So if you buy a share of stock for $10, you can lose a maximum of $10 if it somehow goes to zero.
By contrast, when you sell a stock short, the downside is unlimited. So it’s far more risky to take short positions when compared to taking long positions.
I’ll give you a simple example to demonstrate in case anyone is confused about what it means to sell short. When you sell a stock short, you are borrowing shares in hopes the price will go down.
So let’s use that same $10 share of stock. If I borrow 1 share of stock today from Jack, I can then sell that share to Susan for $10. If the price then goes down to $5 tomorrow, I can buy a share for $5 and return it to Jack. So I sold the stock yesterday for $10, bought it back for $5 today to return it to Jack, and pocketed the $5 difference as my profit (in reality there is also a borrowing fee, essentially interest you are paying on the loan).
But, if the stock instead doubled to $20, I would have lost $10. Or if it tripled, I would lose $20. So the more the stock goes up, the more I stand to lose.
So, due to the risky nature of shorting stocks, and my limited knowledge and experience trading, I have never shorted a stock. (I got pretty close with SnapChat – should have pulled the trigger)
That changed a few weeks ago. Well, I guess you would say it kind of changed, given that I shorted the overall market as opposed to an individual stock. And I did it in a way that I didn’t realize was possible. Specifically, I came across the concept of an inverse ETF. That is, there are inverse exchange-traded funds that seek to provide -100% of the return of the target fund.
So you can buy SPY, which is an ETF that seeks to match the return of the S&P 500. Or you can buy SH, which is an inverse ETF that seeks to provide the inverse return of the S&P 500. (the goal is for SH to go down the same amount that SPY goes up – you can see the 2-year chart of SPY vs SH below)
So you are basically shorting the overall market, but the risk profile is similar to that of a long position given that you can only lose the amount of your initial investment.

Human Progress

If you have minor stomach pain, you might head to WebMD to do a bit of homework before perhaps taking a trip to Rite Aid. If you feel a throbbing pain in your head and blurred vision, you might want to head to the doctor, or better yet a neurologist.
Similarly, if you are establishing an LLC on the side to do a bit of consulting, you might be ok using LegalZoom and TurboTax for your legal and tax requirements. If you are leading a 1,000 person company with offices in 3 countries, you need a group of lawyers, accountants, and a CFO to ensure that all your bases are covered.
In other words, when complexity and the stakes are low, you can handle things yourself with the help of software. When complexity and the stakes are high, you need people, or better yet professionals.
I point this out because I keep getting the same question over and over from lots of different people.
How do you feel about robo-advisors? (automated software to handle passive investing)
If you’re opening up your first brokerage account and want to get your investing feet wet with a couple hundred or a couple thousand dollars, that equals low complexity and low stakes. So sure, tools like WealthFront and Betterment might be great options to “set it and forget it.”
If you have tens or hundreds of thousands of dollars laying around, the stakes are higher. And if you also have considerations like having kids or purchasing property, that adds significant complexity. So it might be time to speak to the professionals (all of which are not created equal).

Philosophy

Perhaps we’ll continue on this same thread as we move into the philosophy section.
Want to know what else is high stakes and high complexity? How about human choice and free will?
I read a fantastic article recently wherein the author had this to say of Google,
The search engine is no longer a model of human knowledge, it is human knowledge. What began as a mapping of human meaning now defines human meaning, and has begun to control, rather than simply catalog or index, human thought. No one is at the controls.
While it’s easy to focus on the internet giants given their massive scale and pervasiveness, the underlying fact is that more and more of our decisions are being made for us, and often when the stakes are high. Spotify wants to decide what we listen to. Seamless and Yelp want to decide where and what we eat. YouTube and Netflix want to decide what we watch. Robo advisors want to decide how we invest.
Perhaps this is just nature’s response to the havoc that humanity has reeked on the planet. Give us the tools we need to build machines that we ultimately lose control over, which eventually leads to some massive shock to the system in order to press reset.

My Latest Discovery

You have got to be kidding me! I know have a total of 4 GREY HAIRS in my beard!!

[VIC – 146] Adding and removing circles

Business & Money

Negotiation is an important component of doing business. And there are many different ways to go about it.

At times, you might make an extremely aggressive offer right off the bat, which is to say that your offer is best and final. I think this can sometimes make sense, especially when you have a large stock of trust and rapport to stand on. This is sometimes the case when you are dealing with someone with whom you’ve worked with many times in the past.

But you have to be careful because there are tons of people that will say something like, “I have no interest in a drawn-out negotiation. So please just give me your best price.” I have found that people that say things like that often are the ones that enjoy negotiating more than most others.

On some occasions, it might be prudent to bake in considerable cushion expecting that there will be a lot of back and forth. From my experience, this is often the case when the relationship between price and demand are inelastic (meaning that people are insensitive to price changes), or when pricing is opaque in a market.

Whatever the case may be, I find that it’s always helpful to walk into a negotiation being aware of your must-haves and non-negotiables. And I wouldn’t suggest revealing these at the start as it’s never a great idea to start with 0 leverage.

Human Progress

Another week, another congressional hearing that puts the incompetence of congressional leaders on full display. This time it was Google’s CEO Sundar Pichai taking the heat.

Congressman Smith: To my knowledge, you have never sanctioned any employee for any type of manipulating the search results whatsoever. Is that the case?

Pichai: It’s not possible for an individual employee to manipulate the search results. We have a robust framework including many steps in the process.

Congressman Smith: I disagree. I think they can manipulate the process.

Or how about this one.

Congressman King: I have a seven-year-old granddaughter who picked up her phone during the election, and she’s playing a little game, the kind of game a kid would play. And up on there pops a picture of her grandfather. And I’m not going to say into the record what kind of language was used around that picture of her grandfather, but I’d ask you: how does that show up on a seven-year-old’s iPhone, who’s playing a kid’s game?”

Pichai: Congressman, the iPhone is made by a different company.

Don’t these elected officials have aids or staffers that are screening their questions and prepping them for these sessions? Perhaps not.

So I’m poking the bear a bit, but that’s not to say that this is not a serious topic. I’d say that the dominance of the big consumer technology companies is problematic in more ways than one.

First, it seems that government oversight and regulation is basically a non-issue for them. Our consumer welfare-centric antirust approach leaves them immune to any real antitrust action. You might even say that consumers benefit greatly by taking advantage of often free and incredibly useful products and services.

Second, innovation in consumer tech seems to be stagnating. Investors seem wary to invest in what has become known as “kill zones” (markets adjacent to those dominated by the big tech companies) and enterprise tech firms seem to dominate IPO headlines.

So it seems difficult to conceptualize what might unseat the tech giants and what might be the next big thing in consumer internet. But it was probably equally difficult to conceptualize what might unseat Microsoft and IBM in their heydays.

Philosophy

Human beings are inherently social creatures. We all yearn for cohesion with a group. And you might say that those groups radiate outward in a series of concentric circles. So first might be your nuclear family, then extended family, then your religion, your city or country, and so on and so forth.

Problems arise, though, when the circles for different people radiate out to different distances. For example, one person’s circles may stop at a national or racial border, while another person has a circle with a larger radius that includes all human beings.

The question is, how do we reconcile such differences? Or better yet, is such reconciliation even possible?

If you look to history for examples, it seems it is possible, but not without the drawing of new circles. Put differently, the creation of common enemy is a great uniting force. But this solution often leads to warfare, so it is perhaps less than ideal.

You might also look for the corollary of new circles, namely the erasing of circles. Take the founding of the United States. In one sense, you DO have the creation of a new circle, but you also have the erasure of existing circles. By that I mean that many Americans seem to put their US identity ahead of that of their preceeding heritage.

So I wonder if people are erasing enough circles as they go about adding new ones.

My Latest Discovery

I’ve written here before about using Robinhoob as one of my brokerage accounts. And it has been great and continues to be great for that. So I was excited and intrigued last week when they announced 3% checkings and savings accounts. But it turns out that when things sound too good to be true, they often are. It turns out that these are not traditional bank accounts at all, but instead money-market accounts with couple extra bells and whistles. That means that cash stored in those accounts are invested in US Treasury Bills (the closest thing to no-risk assets) and that it also is not subject to FDIC insurance like it would be if stored in a traditional checking or savings account.

I know I talked to a few of you about this, so I wanted to ensure that people are fully informed before making any changes to your money management strategy.