Bubbles are Useful

I was in LA for my friend Josh’s wedding tonight. Tomorrow I am in the Valley for a few days.

I may start wearing a suit again after the positive feedback from this tux photo:

Seeing that I am headed to the valley, it’s a good time to catch up on ‘bubbles’. The ‘bubble’ word has been thrown a round a lot again lately.

Social Capital had a good series on bubbles recently. I love this definition:

In a bubble…

Fear of losing capital becomes superseded by a different kind of fear: FOMO. Bubbles give everybody involved a credible reason to believe that follow-on financing will continue be available, and at more and more attractive rates to boot. Which means, if you’re an investor, hey, we’ve gotta get started now! Hurry, before the price goes up! And if you’re an entrepreneur, Hey, we’ve gotta get started now, before the competition does! That’s what we need to break the coordination failure. Under bubble conditions, we willingly and enthusiastically embark on speculative projects that have no line of sight to positive free cash flow and must continue raising more and more money. But sometimes, that’s what it takes to fund these types of big, risky projects. The 19th century railroad barons, early 20th century electric utilities, and end of the 20th century telecom providers that lived to tell the tale will back you up on that.

Here is the first piece ‘An Introduction to Bubbles

This piece is ‘Why Bubbles are (Sometimes) Useful‘.

Have a great week.

Evolution of Money and Investing

The finacial crisis of 2008 set in motion an epic transformation of money and investing.

Two posts worth reading really bring this home for me.

First is this post from Charlie Bilello titled ‘The Evolution of Money‘:

But evolution is not something you can turn on and off. It may take longer, but technology and digital currencies will continue to move forward, regardless of government efforts to stop them. So long as the U.S. Dollar remains relatively stable, there is little in the way of real competition from cryptocurrencies. But with government debt and the supply of dollars continuing to rise unabated, it is only a matter of time before an increasing number of people seek an alternative.

This is not so much a prediction as an economic reality. If your currency is being debased, you will find an alternative or stand to lose everything. Venezuela is perhaps the best example today. With the highest inflation rate in the world (estimated at 525% last year), the number of Venezuelans using Bitcoin has gone from 450 in August 2014 to over 85,000 in November 2016. In Nigeria, a country facing similar issues, we are seeing a similar trend.

I don’t pretend to know what the future for money looks like. I just know it will look different than today. Whether that future includes Bitcoin will ultimately be decided by the market, as it should be, and not some centrally-planned government.

Craig and Morgan at The Collaborative Fund use the $100 billion Softbank fund to dive into the rapidly evolving world of investing in public and private markets in the last ten years. The size of the fund is staggering.

• SoftBank’s Vision Fund is larger than all U.S. IPO proceeds in the
year 2000, or from 2010-2012.
• It is, on its own, larger than the aggregate assets under management
of roughly the bottom 80% of private VC and private equity funds,
and more than the combined value of every venture fund raised in
the last two years.
• It is more than twice the size of the combined value of the next five
largest tech funds in history.

Take the time and read the report.

It is fun to be in the middle of the evolution and revolution as an investor and entrepreneur.

The Internet Will Be The Biggest Stock Market

I like this thought from Balaji:

The rise of all these tokens and public blockchains means that the internet, in the long term, will become the biggest stock market just as it has become the largest library.

If the stock market crashes tomorrow and Bitcoin plunges 80 percent, Balaji is still correct.

In fact, a crash now would probably speed the inevitable.

I was talking to Fred Wilson a few months ago and told him that Coinbase and Robinhood should merge and go public in a dutch auction. He did not call me crazy.

I am an investor in Etoro which already allows their customers (Europe, Asia, Russia) to buy stocks and digital currencies in the same account. They had a record month.

Filecoin and Tezos raised $500 million via initial coin offerings (no investment banks required).

The stock market needs to change and the internet is doing it’s thing. Indexing is in many ways disgusting. You index to the S&P and you blindly buy and support United, Verizon, Best Buy, Comcast, Equifax, Wells Fargo. No thanks.

Identity…Here We Go Again

While you were talking to your friends about the bubble in Bitcoin and the silliness of the blockchain, Equifax suffered a data brach that could affect half of the US population.

I joked on Twitter:

Just sent Equifax my Wells Fargo PIN number and Verizon password. I’m tired of being me anyway.

Justin at Stocktwits had a massively viral and hilarious tweet:

Equifax: you missed a credit card payment 3 yrs ago. How irresponsible. Good luck buying a home

Also, Equifax: Your SSN’s were hacked. Shit happens

I angel invested in Lifelock in 2006 because Equifax, Transunion and Experian had taken us down an ‘identity road to hell (I wrote this piece in 2011)’. Symantec bought them last year for $2.4 billion.

We (Social Leverage) invested in Civic because the blockchain and the right third party could be Lifelock 2.0.

Equifax alone has a $17 billion market cap. It will lose 15-20 percent of their market cap tomorrow and there will be a few witch hunts and perp walks. Bsed on the long term chart, people will gobble up the stock.

BTFD in Manhattan

I walked around New York City today in my Stocktwits BTFD t-shirt.

At least 30 people stopped me in the streets to ask me about it.

Our Stocktwits store is powered by Shopify which makes it incredibly easy to sell merchandise. Stocktwits head of design (Chad Tempest) created the logo for it.

Seeing this picture of Josh Brown and I convinced me that I am too old to pull off such a hip t-shirt, but I will never get too old to sport the BTFD iPhone case.

Of all the people that stopped me, the one that really blew my mind was Raoul Pal, a good friend. Raoul is in town hiding out from ‘Irma’ which is on path with his home and HQ in the Cayman’s. We might just have missed each other if he had not recognized the shirt.

New York is so big and yet so small.

Flying Cars Baby!

Peter Thiel famously said ‘we wanted flying cars, instead we got 140 characters‘.

Personally, after watching Season 3 of Narcos, all I want is season 4 of Narcos.

In the meantime, it seems we do have flying cars. Lilium sounds wicked cool. I will wait for the cheaper Lilium x and Liliumpool!

Peter should also know that we also have unmanned flying drones loaded to the gills with weapons.

The company that makes them is AeroVironment ($AVAV) and their stock is at all-time high.

If you follow me on Stocktwits you know it is a stock I have owned for a while. It is part of my exposure to robots (iRobot as well). Aerovironment is no 8-80 stock, just a stock with strong momentum in a sector institutions are chasing.

Flying cars, manned and unmanned, loaded with weapons or just commuters, are freaking here. Someone let Peter know in New Zealand.

Momentum Monday on Tuesday…Moore’s Law and Quantum Computing

Tren Griffin said this yesterday and it caught my eye:

I’ve watched people consistently underestimate the power of Moore’s law over the years. And these people work with it every day.

Moore’s law refers to an observation made by Intel co-founder Gordon Moore in 1965. He noticed that the number of transistors per square inch on integrated circuits had doubled every year since their invention. Moore’s law predicts that this trend will continue into the foreseeable future.

Adding the global, mobile, social web to Moore’s law has created these freakishly large and profitable companies that no analyst has been able to put in a box.

Now there is Quantum computing which Tren says is far more powerful than Moore’s law. Here is everything you need to know about Quantum computing. Go get a tutor and come back here next Monday for a further discussion. Reading it slowly and out loud helps me fall asleep.

I was sitting with my friend Alex Tarhini today who works for Stevie Cohen’s ‘Point 72’ fund and we were both talking about how bullish we are on startups despite the bouts of silliness we see around us. Obviously, we need to find great founders, but the tools at their disposal are magical.

Which made me also think this evening that I will respond to all Apple and Google bears in my stream with simply #mooreslaw #quantumcomputing.

Bitcoin for Dummies (My Toronto Pals)

One fun thing about visiting with all my old friends in Toronto, is they could give a rat’s ass about what I do for a living.

They are real estate developers, lawyers and accountants.

During dinner, the topic of Bitcoin came up and since I am the friend that supposedly knows about Bitcoin, I came under rapid attack to explain.

I did a horrible job.

If I was Satoshi himself I would not have been able to convert them (I even tried that at one point), but I still should have been able to do a better job considering the amount of time I have owned, tipped, traded and written about them.

I went through a long list of reads I have bookmarked on the subject to forward them and settled on this is my favorite primer to share.

No matter how much you read, you can’t truly understand a digital asset like Bitcoin unless you actually own a piece of one. So you must open an account/wallet to really get over the hump.

PS – This Fred Wilson piece really does an excellent job of explaining how Bitcoin has quickly gone from a payment system to a store of value.

Muskoka and Chill

Tomorrow I head to New York City for the fall. The summer is over.

I have a big list of things to get done this fall and I am well rested and ready to go.

To stretch the last bit of greatness out of the summer that was already fantastic I hung with my best friend Rob and his family in Muskoka.

Muskoka remains one of the most special places on earth.

I love Coronado because of the lifestyle. I love Tuscany because time stands still. I love New York because of the energy.

Muskoka is a vibe that is unique. The intensity of browns and the greens in the landscape of rocks, trees and cottages can’t be explained with photos or words. You have to see it.

A great Muskoka summer would be 12 weeks.

If the summers could be stretched 12 weeks I would drop everything to live out the rest of my life here.

Torontonians are lucky to have it just two hours away.

Back in Toronto

I grew up in Toronto.

I went to school at The University of Western Ontario.

Yesterday I flew home for the first time in almost two years. I got to see my mom and sister, one is off living in Florida now, and had a late dinner with all my best friends (still from high school).

Toronto keeps progressing.

I flew in on Porter Airlines (prop plane) from Boston and landed at the island airpot which was a fantastic little twist to enter Toronto. I was through customs in minutes and in meetings downtown in another 10. I dread Toronto’s Pearson airport and it’s a major reason I don’t like to make the trek.

For VC’s and bankers in Boston or Toronto wanting to get in and out of Toronto to do business, Porter air is a great service.

Our fund has a few investments up in Toronto – Street Cntxt and Joist. I will be back in a few weeks to spend some time with them as Ellen and I spend the fall in New York city.

My gut from this brief visit back to my hometown is Toronto is primed to become a top five technology startup city. Expanding the island airport would be something that would make it happen yesterday.