[VIC – 91] Overvalued is horse shit. ICO 101. Damn millennials. Don’t close your apps.

Business & Money

Early this year I sold my Tesla (TSLA) stock. It had gone up a bunch over the years and the markets were (are) feeling frothy, so I decided to cash in and walk away with the gains. Of course, it has gone up an additional 20% this year and I’m sitting here feeling like an idiot. That said, I’ve noticed a couple other things that I thought were worth sharing.
The first is that there are a couple of foundational pieces of technology that are large drivers of success for Tesla, one being the lithium-ion battery pack.

There are 7,000 individual batteries in one battery pack. And now, given Tesla’s success and a growing global consciousness about climate change, you have every other major car company saying that they will switch all models to electric, and thus lithium-ion battery packs, in the next 5-10 years (unless some other breakthrough comes from left field). So lithium will be in very high demand. If TSLA feels too risky for you as an individual stock, I’d recommend the Lithium ETF (LIT) which gives you exposure to the entire category (lithium miners, battery manufacturers, EV companies, etc) as a hedge against any one specific bet.
The other key factor I was referring to driving Tesla’s success is, of course, artificial intelligence, but I write ad nauseum on that subject here on VIC so I’ll leave it alone today.
The other thing I’ve noticed as a result of selling TSLA is that there is a lot of talk about the market and individual companies being overvalued. And in some respects that is true. If you use traditional valuation metrics like P/E, EV/EBITDA, and the like to compare a company to historic multiples in the category, then yes, the market is expensive. But what I’m realizing more and more is that there are a lot of things that aren’t captured in ratios and financial statements. If you look at Amazon’s filings, where is Jeff Bezos. He’s not on there. There’s no entry for “visionary CEO” on an income statement or balance sheet. There are no entries for durable competitive advantage or strong network effects. I believe it’s far more important to think about the fundamentals of the business, rather than a simple mathematical exercise, and why it will be successful in the long run. Most of the great companies of our day are always “overvalued.” My thinking has shifted considerably to take “overvalued” as a strong buy signal. Perhaps the term is just horseshit altogether.

Human Progress

I’ve gotten the question about how to participate in ICOs a bunch of times, so I figured it was time to write a quick blurb. For the uninitiated, ICOs (initial coin offerings) are a means by which startups and blockchain-based projects raise capital. In short, the company initiates a crowd sale of tokens (think Bitcoin or Ether, but specific to that company or project) to the public. This year ICOs have raised over $1 billion, with the largest individual sales raising over $200 million (Filecoin and Tezos have been the largest and most talked about).
So how to participate.
First, you have to acquire Bitcoin or Ether. The easiest way to do so is via Coinbase, the leading crypto exchange and wallet. You just open an account, connect a bank account, and purchase your token of choice. Keep in mind that, because this purchase happens via a traditional bank, the transaction will take a few days to settle. So if you want to participate in an ICO, you’ll want to purchase Bitcoin/Ether a week in advance.
Second, you’ll need to transfer your Bitcoin/Ether to a wallet you control. With Coinbase, you don’t own your private keys, so that won’t work. The way ICOs work is that you send tokens to a specified address, then a smart contract is executed and your desired tokens are sent back to your address. You need your private key in order to access those tokens. I use My Ether Wallet for this.
Third, participate in the ICO by sending your Bitcoin/Ether to the appropriate address. The company hosting the sale will provide the address where the funds are being collected during a specified window of time. Be careful here, though, because hackers and scammers will try to replace the correct address with their own, stealing any funds sent to their address, with no recourse. They’ve been successful to the tune of millions of dollars.
Last, and especially if we’re talking about considerable sums of money, you’ll want to store your tokens in a cold wallet, aka one this isn’t connected to the internet. Hardware wallets are best for this, with Trezor and Ledger being the most popular.
Hopefully this helped. Be careful out there!

Philosophy

I often write here on VIC about the positive effects of the internet and technology. But one not-so-positive side effect is that we increasingly live in a world of instant gratification. If you want to go on a date, just swipe right and viola! One date coming right up! Hold the awkward meandering up to a group of strangers in the park. Hungry? Not for long with Seamless or GrubHub at your fingertips. Feeling down, just post a picture to Instagram so everyone can like it and stroke your ego.
At every turn, it seems, every need can be met in an instant. The problem is, when it comes to important things like meaningful relationships or fulfillment at work, there’s no quick fix. Substantive interpersonal connections require a sustained and genuine interest in another person’s affairs. If you want to find meaning at work, there will likely be a ton of long hours, frustrating conversations, and uncomfortable situations. And while none of these are fun in the moment, I’d say they’re almost a requirement for anything worthwhile.
This might be the primary reason that people ascribe laziness and entitlement to millennials. You have an entire generation of people that are expertly trained in instant gratification. How you can you blame them (us) for expecting to get exactly what they want when they want it.
And what’s more, many of the needs currently met by technology were previously met by other people. Individuals look to social media for their self-esteem and their sense of well-being, instead of relying on friends and family. This likely leads to underdevelopment in communication faculties and an inability to cope with stress in effective ways.
What you have here is the perfect recipe for what I’ll call the millennial psychosis. And given that the pervasiveness of technology in our lives is sure to increase over time, the future looks rather bleak.
I wish there was some easy answer or magical cure, but there isn’t one in sight. That said, I AM a firm believer that making space in your life to be free of technology and instant gratification is a good start.

My Latest Discovery

I was recently speaking to a friend who happens to be an iOS engineer. As we were walking side by side, he noticed that I had pulled my phone out of my pocket, and was in the process of force quitting a bunch of apps to conserve battery life. He proceeded to tell me that this was futile. He claimed that the power required to reboot an app from scratch was likely equal to, if not greater than, the power used by an app sitting idle in the background.
I’ll have to fact check this one, but an interesting insight none the less.

[VIC – 88] Stop losses are for suckers. There’s Moore where that came from. Magnify your spirit. Narcoooos!

Business & Money

I once had someone say to me “stop losses are for suckers” (a stop loss is when, after buying a certain stock, you set a lower limit on how far it can fall in price before being automatically sold. So if you buy a stock at $100, you might set a stop loss at $80, which means if the stock reaches that point it will automatically sell to protect your down side).
That sentence stuck with me for a long time, probably because I aint no sucker! 😂 But seriously, I had just kind of accepted it at face value without giving it much thought. When you really think about it though, it’s a load of crap for a whole host of reasons, including:
1) Stop losses take emotions out of the equation. Emotions are the investors worst enemy leading her to do incredibly stupid things.
2) Stop losses free up money to pursue other ideas. You obviously want to make your money back, but it might be easier to do so on other companies.
3) Stop losses give you flexibility. The great thing about the stock market is that you can make money whether the market is going up or down. If something important has changed, you need the flexibility to act on that new information. No reason to stay trapped in a losing position.
Now I know what some of you are probably thinking. There are always major drawdowns, even in the market leaders. Amazon, Apple, Google, Facebook, all have seen huge drawdowns and one time or another. Getting stopped out of those means you would have lost out on the incredible gains to come. Fair point. But there’s a far longer list of stocks that have tanked and never came back. Don’t anchor on the outliers. Plus, a stop loss does not mean you can’t come back in at a later point.

Human Progress

These days you often see people writing about the end of Moore’s law (Moore’s law, named after Gordon Moore of Intel, being the principle that computing power, or the number of transistors on a chip, doubles roughly every two years). But, while the pace of improvements to this paradigm are definitely slowing down, to say that Moore’s law is coming to an end is to miss the larger point.
Before integrated circuits (chips), early computers relied on punch cards and vacuum tubes to handle the heavy lifting. It wasn’t until the 1950s when transistors came on the scene.
So, I believe the real idea of Moore’s law is to say that we will continually find ways to improve computing power at an exponential rate, regardless of whether the underlying technology is a transistor moving around electrons on a slab of silicon.
Take quantum computing for example. Once, these are generally available for regular applications, we will see a sudden step increase in computational power. Modern encryption might become obsolete in an instant.
The human brain example of another form factor. Instead of transistors, we have this biological blob inside our heads with about 100 billion neurons layered on top of one another firing in incredibly complex patterns. This is why computer scientists have taken this idea and abstracted it to build what they refer to as neural networks loosely modeled on the structure of the human brain. However, while neural nets are incredibly powerful and this area of research fascinating, we should be wary to spend too much time aiming to replicate the biological version. This was the line of thinking when inventors tried to replicate bird flight by building machines with flapping wings. Then we figured out that a fixed wing system was far more practical and efficient for our purposes.
All this is to say that we’re in the early innings of our computational journey. Regardless of the substrate, we will continue to see exponential improvements with the potentiality of recreating the notion of intelligence altogether.

Philosophy

I often return to this “10 learnings” list by Maria Popova. She published it on the 10 year anniversary of starting her blog. It’s one of my favorites.
The one I love most from this list is “seek out what magnifies your spirit.” The language is simply beautiful and the idea even more so. I’d say it serves any human being well to make sure you find space in your life for whatever it is that magnifies your spirit.

My Latest Discovery

Narcos is back babyyyyy!! (no spoilers please!)

[VIC 86] Waiting for your pitch. Digital health. Free will. Trouble sleeping.

Business & Money

A few weeks ago I went to a baseball game in Chicago for a friend’s bachelor party. It was a ton of fun.


For whatever reason, I was looking at this picture the other night and started to think about investing in terms of baseball.
In baseball when you step up to bat, there’s this concept of the strike zone. If the pitcher throws the ball within that zone, it’s called a strike. If he throws it outside of the zone it’s called a ball. What makes baseball tough is that you can’t stand around waiting all day for a perfect pitch. If the pitcher throws three strikes (regardless of whether or not you swing), you’re out and you lose your turn at bat.
In some respects, investing is like baseball. Every time you analyze a stock, that’s a pitch barreling down toward home plate. If you decide to make a purchase, that’s analogous to a swing. You might get a single and make a little bit of money, or, you might hit a home run and make a ton of money. You also might whiff and lose money.
The difference with investing, however, is that you’re never forced to swing. There’s no 3 strike rule. You can stand at the plate all day long waiting for that perfect pitch. You can wait day after day, week after week, month after month, even year after year. Only when you see the perfect pitch, and you have a ton of conviction, do you swing.
I’d say that’s one of the hardest things about investing, being patient and waiting for your pitch.

Human Progress

I’m excited to see how digital health will transform our lives.
I already wrote about my Teladoc (TDOC) investment here and why I’m excited about what they’re up to.
I also invested in Care.com (CRCM), which is an online platform that helps people find various types of care (senior care, child care, etc). Seems like another perfect problem to solve with an online marketplace (platform + network effects).
I’m considering an investment in a company that makes surgical robots for spinal procedures. Spinal surgery seems much better suited for the machines. Plus, consumers don’t pay for surgeries, insurers do. Even when out of pocket expenses are huge, you will take out a loan or do what’s necessary if you need serious spine surgery.
Apple is working hard to turn the iPhone into digital health tracking powerhouse.
If you’re at all interested in this space, here’s an awesome newsletter I subscribe to to stay abreast of what’s happening.

Philosophy

I’ve been doing some thinking about free will of late. The question I’m mulling over is “does it really exist?”
On the surface, we all have free will. You can decide where to go for dinner, what clothes to wear to work, and whether or not you treat people with kindness.
But if you think about the concept of free will on a deeper level, even with respect to those simple examples I just provided, things start to fall apart.
Let’s take the “where to eat dinner” example. First, you get hungry, which is simply a physiological and biological reaction to a lack of energy and nutrients. Chemical signals in your brain drive you to eat. The types of food that you like are a product of cultural and social pressures from the environment in which you inhabit. The time at which you eat is based on a schedule that has been arbitrarily defined to meet the needs of humans where ever you live.
You can see how this plays out when you start to peel back the layers for any “decision” you make.
While this line of thinking may seem like a glass-half-empty type of exercise or philosophical circle jerk, there’s also a bright side. When people treat you poorly or things don’t work out, I think it may be easier to deal with if you understand that no one really had a choice to do anything differently. That guy that was rude to you this morning probably had coffee spilled in his lap on the subway. The homeless woman blocking the entrance to your building didn’t choose to be homeless. She’s probably a war veteran who’s seen some really fucked up shit and this country doesn’t do nearly enough to help vets successfully integrate back into civilian life.
No one is out to get you. Life is just one huge chain of cause and effect that doesn’t start or end with you. You’re just one random link in the chain. No reason to be upset about it.

My Latest Discovery

Sometimes I have a little trouble sleeping. Lucky for me, my fiance is super creative with natural solutions to this problem. Two of her ideas that have been a god send have been:
1) Apple cider vinegar tea. It’s simple, delicious, and effective. Just hot water, a tiny bit of raw unfiltered honey (this helps with seasonal allergies as well), and a couple table spoons of apple cider vinegar. It works wonders!
2) Avalon Organics Nourishing Lavender Shampoo. People often use lavender shampoos for babies, but it seems to work well for big people too.

Platform businesses with network effects. Musk vs Zuckerberg. Subatomic particles. Duo neck pillow.

Business & Money

In looking at my investment portfolio, I noticed that nearly all of my holdings are platform businesses with strong network effects.
I define a platform business as one that creates more value for the businesses built on top of it than the platform business captures itself. Take Amazon for example. If you add up the value of all of the businesses that sell their products via the Amazon marketplace and leverage their fulfillment services, that would be a much larger number than Amazon’s market cap.
Network effects occur when the value of the network increases as more participants join. Take Apple. As more people use iPhones, more developers are incentivized to build apps for iOS. As more apps are available in the app store, more users are incentivized to join the platform.
If you look at the most valuable public companies in the world by market cap, 7 of the top 10 are platform business with strong network effects (AAPL, GOOGL, MSFT, FB, AMZN, BABA, TCEHY). This might be the most powerful business model in existence.
The latest addition to my portfolio is Teladoc (TDOC). It is a telehealth company that provides on-demand medical services via mobile devices. If you think about many of your doctor’s appointments, there’s no reason that they couldn’t have happened via video chat from your iPhone. Right now, TDOC is a B2B2C (business-to-business-to-consumer) service in that they sell to companies, and the companies, in turn, offer the service to employees as part of a benefits package. But I see no reason they can’t enter the B2C channel directly.
And healthcare is perfect for a platform business with network effects. You have providers and patients that come together to form the perfect marketplace. With more providers, the service is better for patients and vice versa. And due to the regulatory environment, this could be a winner take all market where the first to scale takes the lion’s share of the profits leaving a long tail of companies to fight over the scraps.

Human Progress

In reading business and technology news these days, you’d be hard pressed to avoid pieces on artificial intelligence and automation. Still, it’s not every day that two tech luminaries way in on the subject and get into a twitter spat more common of Donald Trump or a couple of c-list celebrities.
When asked about Elon Musk’s warnings about the existential threat posed by AI, Mark Zuckerberg replied with “I have pretty strong opinions on this. I am optimistic. And I think people who are naysayers and try to drum up these doomsday scenarios — I just, I don’t understand it. It’s really negative and in some ways I actually think it is pretty irresponsible.”
Then Musk fired back with this gem.

As funny as this is, our time is probably better spent thinking about the real implications of AI. Without trying to guess about specific future scenarios, the general possibilities might look like the following:
1. AI is caught up in the hype cycle. We’ll continue to get better search results, more personalized Facebook feeds, and even robot radiologist that can read x-rays and CT scans better than a human. That said, to say AI poses an existential threat to human civilization is simply an exaggeration and overly pessimistic.
2. AI will be massively beneficial. Human productivity and industry will see incredible gains due to the automation of boring and repetitive work. Entire industries will be transformed as the rate and efficiency of production explodes. While these things are clearly positive, there will likely be large sections of the population that see unprecedented changes to their lifestyle and ability to make a living.
3. Take number 2 to the extreme. The AI explosion will lead to superintelligent machines and there will be no more jobs left for humans to do. Best case we become cyborgs completely integrated with technology. Worst case, we become paperclips.
Something akin to number 2 seems to be the most likely scenario. But however things end up, it will be important to ensure that the gains of this technology are appropriately distributed across society and that negative externalities are minimized. We’ll need to ensure that all groups (political, racial, economic, etc) are at the table and engaged in thoughtful conversation.

Philosophy

In quantum mechanics (the study of the motion and interaction of subatomic particles), you are never sure of a particle’s specific location. Instead, you can only calculate the probability of the particle’s position at a given time.
I find this idea to be extremely elegant and one that should be applied to other areas and not just this specific domain.
Much of life seems to exist in polarities. It’s hard for some people to conceptualize being transgendered because they have only ever understood male and female. People identify as democrat or republican. A statement is either true or false.
If the very foundation of matter and reality is imprecise, we as human beings would be well served to understand that idea and think in those terms more broadly.

My Latest Discovery

A friend recently told me about the Duo travel pillow. If you travel a lot for business or pleasure, this is a must add to your travel accessories.

[VIC 82] Don’t be a dummy. Owning vs renting. Coming together and falling apart. OfferUp

Business & Money: don’t be a dummy

I came across an incredible quote this week from Howard Lindzon that went as follows:
“I am always willing to let an investment become a trade and try not to let a trade become an investment.”
Before I touch on why I love this, here’s some background. The price of Ethereum has recently been falling. In response, Howard bought the dip with the idea that the price would likely bounce and trend higher over the long run. When it did, jumping from $140 to $240 in one week, he sold off some of the position to capture some of the profits.
With that context, Howard’s activity looked like that of a trader. When the price dips on an asset, and the trader can’t figure out why, they might buy the dip to capture a short term gain. This idea, however, flies in the face of how Howard previously has spoken about crypto investing. He’s been quoted as saying that he views this asset class as a long term play, similar to a venture capital investment. So why sell to make a quick buck if you’re taking a long term approach?
The idea is actually quite simple if you really think about it. If an investment gives your a return in 1 week, that you would otherwise be happy with over two years, it’s ok to take some money off the table.
I bought into Ethereum at $30. When it hit $300, I took some money off the table.
I bought into Bitcoin at $330. When it hit $2,000, I took some money off the table.
I bought Nvidia at $60. When it tripled in a year, I sold off most of the position.
When things are going well, it’s tempting to get greedy and keep pushing for more. But we live in an unpredictable world and we’re in the midst of one of the longest bull cycles on record. Don’t be a dummy!

Human Progress: owning vs renting

When I was 13 or so, I was obsessed with amassing a massive DVD collection. Anytime I went to Blockbuster to rent a movie, I would stop by the $5 box to see what I could add to my shelf. Then Netflix came along.
Remember that massive binder you used to drive around with that held all of your CDs? Add a 6-disc changer and now you can really stunt! Enter iTunes, and now Spotify.
One of the happiest days I can remember was buying my first car. I took the morning off of school on my 16th birthday to be sure I got my license at the earliest possible time and hit the road. I ditched my car in 2013 for Uber + public transportation.
Perhaps the single most tectonic shift in the economy that I’ve seen during my lifetime has been the shift away from owning towards renting and subscriptions. We ride in other people’s cars, sleep in their beds, and stream what ever type of media we’d like to consume. And all without buying anything.
The question I have is, where does this stop? As technology reduces friction and makes renting/subscribing, instead of owning, more practical, I wonder what personal and cultural preferences will prove too strong a counterbalance.
You probably thought the idea of sleeping in a stranger’s bed was gross 10 years ago, but Airbnb has made that normal and culturally acceptable. Right now, I’d say it’s pretty gross to think about sharing clothing. What if, instead of packing clothes, I could show up at a destination with fresh fits waiting for me in my hotel/AirBnB. Probably viable, but not sure about underwear and socks. Perhaps that too will change over time.

Philosophy: coming together and falling apart

Everyone knows about the Big Bang. It’s that theory of the universe’s birth that states that some 14 billion years ago the universe was this infinitely small, dense, hot place. Then a massive “explosion” tore things apart with unfathomable energy, creating all matter and hurling it in all directions at once.
Despite the evidence of cosmic background radiation, constant expansion, and the like, I don’t like this theory. Now I’m no cosmologist or astrophysicist and don’t purport to understand this topic at a deep level. Rather, I don’t like the theory because it begs the question, what happened before the Big Bang?
In talking about the birth of the universe, I can only apply the conventional meaning of the word “birth.” Babies are born, but you can explain what happened before. Sex, fertilization, gestation, and all that jazz. So the “birth” isn’t really a beginning in any real sense. Companies and ideas can also be born, but after a period of critical thought, amassing knowledge, etc.
So, coming back to the universe, my simple mind has difficulty conceptualizing what is meant by the “birth” of the universe as suggested by the Big Bang.
As such, the theory of the universe known as the Big Bounce makes much more sense to me. This is a hypothetical model of the universe that describes a cyclical process wherein the universe goes through constant expansion and contraction. So that big “explosion” referenced in the Big Bang, that was actually the result of the collapsing of a previous universe (the “bounce”).
And this second theory seems to follow the model that all other processes, both biological and not, follow.
Tides come in, and they go out.
Organisms are “born” and they die.
The planet freezes, and it thaws.
Empires rise, and subsequently fall.
All things seem to come together, then fall apart. They come together again, and then they fall apart again.

My Latest Discovery: OfferUp

The lady and I have increasingly been using OfferUp to buy used goods from local people. It’s basically Craigslist, but better. Since you have people tied to a profile and email address, you get real identity, and thus, more safety in the marketplace. It’s also mobile friendly allowing you to easily transact from your phone.

[VIC – 81] She loves a sale. The evolution of regulation. Playing not to lose. The Big Sick.

Business & Money: she loves a sale

My fiance loves a good sale. Whenever she happens upon one, she gets really excited. “How could I not buy this?? I’m actually saving money.”
This mindset isn’t rare. In fact, it follows basic economic theory. Keeping all else equal, demand rises if price suddenly fall. In reverse, prices go up, demand falls. Pretty straight forward.
The funny thing is, the opposite is true in the markets. Prices go up, investors buy more. Prices go down, investors rush for the exits.
The interesting question, for me at least, is what is the cause and what is the effect? Do falling prices incite fear in the markets, or do fearful investors cause recessions? Conversely, do rising prices lead to optimism and confidence, or do those mindsets push markets higher?
Or is it just a self-perpetuating cycle?
Hmm…

Human Progress: the evolution of regulation

Regulation and innovation go hand and hand. We all want new cool things that increase productivity and make life easier, but not at the expense of our safety and well being.
And if you think about regulation, in and of itself, it too goes through constant iteration, albeit much slower.
To start out, it was all about command and control. We created rules and laws that defined what a person/entity could or could not do. And that’s all well and good with lots of simple things. You have to pay your taxes. You can’t kill people. Seems logical.
But that doesn’t quite cut it when you want to encourage a certain activity without forcing someone’s hand. For example, you might want to encourage investment or economic activity in a particular region. You can’t simply make it illegal to do business elsewhere. But what you can do is create incentives or rebates that incite the same effect. You might, for example, provide tax rebates for particular types of investments or reduce start-up costs for new businesses.
In other words, when the sticks and stones of laws and legal bureaucracy don’t suffice, these market-based regulatory schemes often work nicely.
But now, in the information age, we have an altogether different regulatory framework taking shape. As software infiltrates every area of life, this new framework is often referenced by the simple phrase, “code is law.” That is, regulation can simply be written into the code base for any product or service. A few examples:
Late last year, a car sharing service built on top of Facebook acquired a smaller competitor. In doing so, it was now required to have a Facebook account in order to use the service. While many services offer a “sign up with Facebook” option, in addition to a regular (email/password) signup option, now only the first was available. So, if you want to use the service, I hope you’re prepared to hand over all of your personal information. What does that say about privacy regulation and digital identity?
iOS 11 will come with a safe driving feature this fall. So, instead of a fine or penalty if you’re caught texting while driving, it will now become increasingly difficult to even do it in the first place. Does that infringe on individual freedoms/rights? I don’t know, but it’s definitely something to think about.
Looking into the future, is it even possible to flee the police in a self-driving car? Not likely.
But, at what point will code-based limitations on behavior and free will become unethical? Should people have the choice to make the “wrong” decision?

Philosophy: playing not to lose

I play on a basketball team with a group of friends from college. It’s really great to see these guys on a more regular basis. It reminds me of why we were so close in the first place.
In a game a few weeks back, we were winning by about 20 points at half time to a clearly inferior team. In the second half, we decided to slow the game down to protect the lead. The thought process was basically to play not to lose, instead of playing to win.
Let’s step away from the game for a second. In business, if you’re crushing the competition and making boat loads of money, do you take your foot off the gas and play to “protect the lead.” OF COURSE NOT! You keep innovating and killing it to pour gas on the fire.
When you finally win over the girl of your dreams, do you sit back and stop trying so hard in the relationship? I CERTAINLY HOPE NOT! THAT WOULD BE 🍌🍌🍌🍌🍌!! You wine and dine the hell out of her and remind her every day that she’s the most beautiful creature on the planet!
So back to the game. Long story short, we went on a 10-minute scoring drought, blew the lead, and lost the game. Why did we lose? Well, the reason is pretty damn obvious in hindsight. Why the hell would you do in basketball what makes absolutely no sense in every other arena in life?
Lesson learned!

My Latest Discovery: The Big Sick

The Big Sick is one of the funniest movies I’ve seen in a long time! No seriously, go check it out! In case you haven’t caught the trailer, here it is:

[VIC – 80] Two horses 🐎 🐎 . Advanced trading for all. Not so fast 🏃. Shitty push notifications.

Business & Money: two horses

Here’s a thought experiment:
You own two horses.
One is winning every race and seems to get stronger by the day. You were super lucky to acquire him via a deal with an old friend.
The second horse you have raised from a baby, but he’s very slow and always finishes near the back of the pack.
It’s important to note that horses are expensive and time-consuming to train and maintain.
Given limited time and financial resources, what do you do? Continue trying to train both, or let the slow one chill in a field with some yummy grass while pouring all of your time and energy into the fast one?
Ok, stupid question with an obvious answer. But in life, when emotions and egos are involved, sometimes things are less clear.
I say this because I’ve decided to spend a little less time thinking about what personal project I will work on next. Not because the entrepreneurial voice inside of me is any quieter of late, but because I’m already on a winning team. In the last 2 years at work, we’ve brought in an additional $32 million of capital, grown in size by 500%, closed a ton of deals, and established ourselves as a serious player in our market.
I hope that doesn’t sound pompous because that is the opposite of the point I’m trying to make. Rather, the point is that I believe my thinking has been a little off. The chances of success for a startup at our stage is 100,000,000% higher than trying to build something from scratch. So given my goals and limited time/resources, it makes far more sense right now to double down on the winner and save other opportunities for some time down the road.

Human Progress: advanced trading for all

Historically, advanced trading techniques have been reserved for sophisticated investors, money managers, and the like. But technology is changing that. Specifically, the team at Robinhood is doing great work to democratize investing for the average person.
They’ve recently launched Robinhood Gold which adds a number of advanced features. While trades will always be free, for a flat $10 per month you can get:
1) Trading on margin (margin works just like a credit card where you are buying something with borrowed money). Robinhood will lend you money to buy stocks. If you see an opportunity unfolding, but you don’t have extra cash in our account, you can trade on margin. And the great part is, anyone can sign up for Robinhood Gold for the same $10 per month regardless of the size of your account or your investing experience. With most traditional brokerages, applying for a margin account sucks. There’s usually a long application process which asks about your annual income, net worth, investing experience, and a bunch of other things. Like I said, it sucks. Of course, the amount you can borrow is proportional to your account balance.
2) Instant settlement – when you sell stocks or deposit cash into your account, you no longer have to wait for the funds to settle (~3 business days). You can trade immediately.
3) Extended hours – instead of only trading between the normal market hours of 9:30am – 4:00pm EST, you can now trade 9:00am – 6pm EST. This is great if you like to trade on special announcements and events like quarterly earnings. With earnings releases, which usually happen after market close, prices often move much more during after-hours than they do during the day. Now you can take advantage.
It’s really exciting when technology makes things accessible where they otherwise wouldn’t be.

Philosophy: not so fast

For every yin, there is a yang.

Just a moment ago I was celebrating the benefits of having a brokerage account in your pocket. And that is surely a good thing. But not ALL good.
If you think about the relentless progression of technology, the goal is always to make things easier. There was a time when you had to take a check to a bank to deposit it. Now you simply pull out your phone, snap a picture, and voila. Check deposited. Just get back from a trip? No longer do you have to drop the film off at the store, wait a few days, pick up the pictures, and mail them to loved ones. Just upload the photos to Facebook along the way and your friends and loved ones can experience everything with you as it happens.
In the aforementioned examples, easier is a good thing. I can’t think of a reason I would want to waste time and energy driving to a retail bank location or developing film.
But going back to a mobile brokerage, I’m not so sure. If you are just getting started with investing, the last thing you should be doing is trading in and out of positions on a regular basis. First off, it doesn’t make sense for tax purposes. You pay far higher taxes for short-term positions. Secondly, when access too easy, emotions will lead you to do stupid things. You’ll be inclined to sell stocks that are underperforming and buy more when you’re in the green. I’ve been guilty of both. Thirdly, you can’t do any real research in the app. Key statistics, ratios, earnings, research, financial statements, none of it is accessible. In other words, the app makes in incredibly easy to do all of the things you shouldn’t do while making it impossible to do the things you should do.
And you can’t even blame people for making bad decisions. We have all of these psychological bugs as human beings that so often lead us astray. A mobile brokerage provides an excellent opportunity for our fundamental limitations as humans to run amuck.
And you can see these examples all around us. Social media is probably the most obvious. You have all of these incredible benefits that the technology has bestowed upon us like constant connectivity to loved ones, excellent content discovery, etc. But there’s also this dark underbelly that facilities the spread of misinformation, harassment, privacy infringement, and a boat load of mindless time wasting.
We really need to figure out a better way to ensure that our technologies are being leveraged in ways that add optimal value while also protecting us against our own weaknesses as human beings.

My Latest Discovery: shitty push notifications

In my declining use of Facebook over the years, I’ve discovered just how psychologically nefarious that company is.
When I was a regular user, the push notifications were pretty relevant. So and so tagged me in a photo. So and so commented on my post. I had all of these ongoing conversations and threads related to how I was engaging on the platform.
Now that I rarely post (outside of giving you guys a heads up about new issues of VIC – I know, that’s pretty meta), the notifications are utterly ridiculous. Here’s a sampling from this week:
“Do you know so and so?” Why am I being notified with a question asking if I know a random person, with whom I happen to have 2 mutual connections?
“So and so is interested in an event near you.” Ugh, ok…
“So and so just posted for the first time in a long time.” IDGAF! I didn’t even engage with that person when I was a regular user.
“So and so commented on so and so’s photo.” Are you kidding me? I commented on a photo from an old friend last year, so now you will notify me when anyone else (regardless of if I know that person) comments on that photo?
The funny thing is, I think I have more notifications now then I did when I was opening the app all the time. They’re trying so hard to get me to waste time scrolling through my feed so they can sell my attention to advertisers. And once you log in, they’ve mastered the game of attention. You get mini hits of dopamine as you scroll through the endless vacation photos, baby pictures, and cat videos.
Lucky for me, given I own a chunk of FB stock, most don’t have the discipline to look away.

[VIC – 79] WIFI. Crisis Text Line. 📖 vs 💻. StashInvest.

Business & Money: WIFI

A friend and I were recently talking stocks and he asked me what pick I was most excited about right now. I answered with Boingo Wireless (ticker WIFI). Here are my reasons:

While smartphone growth in terms of total subscribers has slowed substantially in recent years, mobile data is exploding. People are spending more time than ever on smartphones and the growth shows no signs of abating.

And much of that time is now spent consuming mobile video. Video is far more intensive on the network then text, images, or audio.

Mobile networks were not built with this deluge in mind. As a result, most of the growth will be handled by WiFi and DAS (distributed antenna systems). Roughly 80% of mobile data consumption happens on WiFi.
The big wireless carriers are engaged in a race to the bottom. All are launching unlimited data plans due to consumer demand, which is putting serious strains on margins. Simultaneously, in order to acquire customers, they are rapidly reducing pricing and offering ridiculous promotions like a free year of service if you switch providers.

Given all of the above, Boingo seems positioned perfectly. They are partnering with the cell providers which allows the providers to automatically offload capacity to DAS (Boingo is one of the leading providers). They’re also building out DAS at strategic locations like airports, stadiums, military bases, and the like. And these contracts are all 10+ years in duration. That’s predictable revenue if ever seen it! Take a look at their latest investor deck if you’re curious.

The primary risk I see comes from carrier competition. Theoretically, carriers could choose not to partner with Boingo in favor of building DAS infrastructure themselves. But this seems unlikely because 1) building DAS is altogether different than building wireless networks. 2) Margins are already under a ton of pressure making this level of capital investment hard to swallow. 3) Cell companies are too busy trying to become content/media companies.

Human Progress: Crisis Text Line

All of the AI applications that you read about in the media reside in the for-profit realm. You have silicon valley and Detroit battling it out in self-driving cars. The big tech companies fighting for supremacy in voice assistants. Everyone trying to figure out how to use AI & ML to add real value to the bottom line.

Less publicized are applications in the nonprofit world. One such example involves Nancy Lublin and one of her nonprofits called Crisis Text Line. The organization provides relief to those in crisis via text messaging. How is AI relevant here you ask?
It turns out that people in crisis use certain trigger words in their messages that might reveal how likely they are to harm themselves. What are the first words that come to mind that might signify a suicide risk? Perhaps, death, die, suicide. That’s exactly what I thought too. After feeding all of the text messages into a database with the associated outcomes, then running a machine learning algorithm over all the data, it turns out we were wrong. Words like Tylenol, ibuprofen, and a crying face emoji were far more likely to lead to a suicide attempt than words like die or suicide.

Check out Nancy’s story in a recent episode of the Masters of Scale podcast from Reid Hoffman.

Philosophy: Books vs blogs

There’s an epic battle playing out in my psyche and I thought I would let you in on the mayhem.

In the right corner wearing the blue gloves we have books. I love books. They allow you to dive deep on a subject or story and require a certain level of sustained attention. It’s a kind of commitment to inquiry, analysis, and learning that I truly believe is vital so self-development. The great ones take on a life of their own and withstand the test of time, passing on their wisdom for posterity. Since we’re riding with the boxing analogy, let’s call books the intellectual heavyweight.

In the left corner wearing the red gloves we have blogs. I love great blogs. Not the shallow pop culture stuff, but blogs from interesting and insightful people that produce quality long-form brain food. Given their relative brevity, you get a far more diverse set of authors and ideas than is possible in the realm of books. You also avoid the trap that many book authors fall into wherein they pontificate about a subject for pages on end when an idea could have been just as easily presented in a paragraph. In other words, the value per word is far greater on a blog. You also have a level of interactivity with blogs offered by the comments section and their inherent shareability.

These two fighters seem to always go the full distance and end in a draw. And that’s ok because I don’t believe there has to be a clear winner. Both are wonderful in their own right.

I WILL add one thing though. At the end of the “blog” section, I mentioned interactivity as a point in the win column for blogs. However, books force another type of interactivity. While you don’t get to discuss things with the author or other readers, a great book forces you to interact with yourself in a way that sometimes carries much greater weight than interacting with others. They challenge your ideas and perspectives and often force you to reconsider things. And for more than 10 or 15 minutes. This might be why, for me at least, books get the nod.

And in boxing for that matter, things were clearly better back in days of heavyweight slugfests!

My Latest Discovery: StashInvest

A friend of mine reached out a few months ago asking about investing in stocks. I spoke to him for a while about my approach to picking companies. After the discussion, the friend said that they wanted to start investing, but many of the stock they wanted to buy were really expensive. One was Priceline which currently trades at $1,874. Given he wanted to start with a small portfolio, it’s pretty tough to diversify if you’re spending almost $1,900 for one share of one company.
Lucky for my friend, Stash (the company is actually called Collective Returns) is breaking down barriers for entry-level investors. They allow you to buy fractional shares and you can open an account with as little as $5. Gotta love how technology democratizes things!

[VIC – 77] Greedy when others are fearful. Signal v Noise. Maps. Google Authenticator.

Business & Money

Warren Buffet is famously quoted as saying that it’s important to be “fearful when others are greedy and greedy when other’s are fearful.” When people are greedy, demand is high and prices go up. Thus it’s easy to overpay for things. Inversely, when people are fearful, demand is low and prices fall. This can lead to good value buying opportunities.
Safe to say that people are greedy right now. The markets are frothy.
If you look at Berkshire’s financials, their market cap is north of $410 billion. Almost a quarter of that is held in cash and other short-term investments. This ratio of cash to value is really high. When the inevitable correction comes, they’ll willing and able to acquire good business on the cheap.

Human Progress

One of the side effects of technological improvement has been an ever increasing access to information. You can whip out your smartphone and get the answer to any question you might have.
While this is great for many reasons, it’s also terrible at the same time. Specifically, it makes is much harder to differentiate signal vs noise. I constantly have to remind myself of this when it comes to investing. The tendency is to want to check my portfolio on a daily basis hoping for a quick shot of dopamine whenever I see a green arrow pointing up. But, daily stock performance is guaranteed to be more noise and less signal.
No one puts the signal v noise discussion in better context than Nassim Nicholas Taleb in his great book Antifragile: Things That Gain From Disorder. Here’s an excerpt:

Philosophy

A few weeks ago I needed to visit a jewelry store. I pulled out my phone, typed in “jewelry store” in Google Maps and viola, there were 5 stores within a ten block radius. I chose one and was on my way. As I neared my destination, the streets become increasingly packed with people. I probably should have picked a store that was NOT in the middle of a high traffic area of Manhattan during rush hour.
This got me thinking about maps in general, and how deficient they are. The map I looked at on my phone showed me a grid of NYC streets. It didn’t show may how many people might be in my target area during a specific time of day. Had I been a tourist, I may have jumped in a cab, only to find out that the subway would have been a more efficient means of transportation.
If you’re a city planner, maps of sewage systems and electrical lines would be equally, if not more important than ones showing street names. Or perhaps you want to consider a map of real estate values.
On an even larger scale, think about the map of the entire world. The first problem is that trying to represent a spherical object like a planet on a flat piece of paper will immediately cause problems. Shapes and sizes will inevitably be distorted. Africa, for example, would have to be 13-14x the size it usually appears on world maps.
Zoom out even further, a map of the solar system is actually a pretty ridiculous representation. It’s as if distance and size are of menial importance. It’s only real value is in gleaning the order of the planets from the sun.
All this is not to say that maps are useless tools in understanding the world, but any one map will always have serious limitations. You have to consider the subjective perspective of the creator, the mediums it’s presented on, when it was made, and many many other facets.

My Latest Discovery

I’ve recently switched to using Google Authenticator for all two-factor authentication (2FA). It’s much safer than receiving 2FA codes via SMS because Google Authenticator is not tied to your phone number. If a bad actor hacks a phone system, then can intercept 2FA codes coming in via SMS. One could even port your cell number without you knowing which would allow them to do the same. There has been a spate of recent attacks that have followed this formula so do yourself a favor and get Google Authenticator or something similar that doesn’t rely on your phone number.

[VIC – 76] Running 🏃🏃 for the exits. Early = wrong. Toasters as teachers 📝. Filter by unread. Do dreams 😴 mean anything?

Business & Money

Take a look at Best Buy and Home Depot over the last year:

At a time when most retailers seem to be hemorrhaging, these guys are both trading at all times highs. This fact reminds me of 2 key points in investing:
It’s not an abstract philosophical game. Regardless of what people are saying, you simply have to think deeply about the business and analyze the numbers. It’s purely rational.
Second, and more importantly, when everyone is running for the exits, it’s a great time to look for cheap opportunities to buy. When the housing market crashed, it was a great time to buy real estate. After the internet bubble burst, great engineers and companies could be acquired for next to nothing.
If investing was about consensus, everyone would be rich.

Human Progress

I want to talk about cryptocurrencies and the underlying technology today. But before we dive in, I realize I’ve written on this subject before without providing adequate context and background to why it’s really important.
First, let’s consider banks. Banks have essentially unfettered control over money. They can print it (causing the value to fall). They cash restrict your access to it (e.g. in the case of a run on the bank = close banks when too many people are attempting to withdraw cash). They prey on the poor with myriad fees and predatory loans. The list goes on and on. And the best part, when they screw up, there are basically no repercussions (hence the term “too big to fail”).
Long story short, the incentive structures are all messed up. And given that these centralized institutions control our financial system, we’re basically forced to simply sit on our hands and pray they do the right thing (don’t hold your breath).
It is here that we arrive at the central tenant of the blockchain (the technology behind cryptocurrencies): it’s decentralized nature. There is no central entity (person, company, government, etc) that controls the entire system. Instead you have a distributed system (think ledger or database) where each entry is verified by lots of independent and self-interested parties (“miners”). As a result, you have inherent trust baked into the system. All participants rely on all other participants for the safety and integrity of the system. Incentives are beautifully aligned. (The implications go far beyond money, but this core tenant provides enough context for now)
So why are we revisiting the subject this week? Because of the price action of course.

This past week, 9 different people hit me up asking where/how to buy cryptocurrency. And many were people completely outside of the crypto.. actually the technology industry altogether. This is a telltale sign that we’re in bubble territory. Speculators and uninformed consumers are artificially inflating the value of cryptocurrency right now. And moreover, we don’t have any mainstream consumer application that would equate to higher demand (and higher prices as a result). It reminds of the dot-com bubble of the early 2000s when regular people were sinking their life savings into internet stocks, only to have it all evaporate overnight.
But the dot-com bubble is a prudent analogy for another reason. While companies were going bust left and right, many were actually incredible ideas that would later become valuable in their own right. Remember WebVan? It was FreshDirect before FreshDirect. Or what about the spectacular failure of Pets.com? Just a few months ago PetSmart acquired Chewy.com for $3.35 billion. It’s too bad that being early is synonymous with being wrong.
Similarly, I am a blockchain bull all day every day. It seems obvious that this technology will be absolutely revolutionary. But how many real consumer applications are viable today? Maybe a few. But there are a ton of things that need to be figured out first. What’s happening right now is speculation, plain and simple. Don’t be a sucker! If you want to get involved, park 1-2% of your portfolio in a secure crypto wallet and let it sit there for the next 10 years. In the meantime, it’s a good time to start educating yourselves about what’s coming.

Philosophy

So I wanted to show you my toaster:

You’ll notice that the power is set to level 5. This is a recent change. Up until last week, it was set to level 3. I think it came that way when I bought it. And level 3 was a great setting. It cooks waffles perfectly. The only downside is that you to run it twice to achieve said perfection. So when the waffles pop up, I would simply push the button down again for one more cycle and viola. Perfect waffles.
One day last week my fiance noticed this pattern and asked, “why don’t you just increase the power setting so that you only have to run it once? Wouldn’t that be faster?”
“Blasphemy,” I thought to myself. I already had a fool proof system of cooking waffles.
For some reason, I kept thinking about the toaster at random moments throughout the day. Of course it would be better to find the optimal power setting, but that would force me to venture into uncharted territory (a.k.a. untested power settings).
The next morning I decided I was in a risk-taking mood. I switched the power setting to 6 and pushed the button down. It was a grueling 90 seconds of weighting. Then pop! They were too done! Not burnt per say, but more done than I preferred. I knew I should have stayed with my system!
The next morning I was at it again, but with level 5 this time. To my surprise, the waffles were perfect. That wasn’t so bad after all. One false start the day before, but now back on solid ground.
While this is a pretty trivial example, fear of change is a real thing. I spent almost 4 years avoiding the power setting on a toaster due to fear of change. If an obstacle this small can cause such cognitive dissonance, one can only imagine what happens when larger ones present themselves.
I appreciate my toaster for this much-needed reminder.

My Latest Discovery

I’m either an oblivious idiot, or you will thank me effusively. Did you know that this little icon filters your inbox by “unread.”

I’ve wondered so many times why there was no easy way to do this. All the while, it’s been right here in front of me.

Question Of The Week

Whenever I have a dream, I tend to journal about it the next day to parse it for meaning. I’ve always felt that dreams were a great way to listen in on your unconscious mind. What do you think? Do you place any value or meaning in your dreams?