Marvin’s Best Weekly Reads Sept 5th, 2021

“Happiness consists more in conveniences of pleasure that occur everyday than in great pieces of good fortune that happen but seldom” — Benjamin Franklin

  1. “In Sacca’s new investor letter for his latest climate funds, he describes his return this way: “In the timeless words of LL Cool J, don’t call it a comeback, we’ve been here for years. We just finally admitted to ourselves that 60 hours a week has been the opposite of retirement. This time around, we’ve staffed up by bringing on full-time science and sector experts while building a community of advisors and collaborators that keep us learning every day.”

Sacca — along with his wife, Crystal Sacca, and general partner Clay Dumas — have invested in about 50 companies with the Saccas’ own money. Lowercarbon retroactively gives outside investors exposure to a slice of those companies and is continuing to make a bunch of investments in climate-oriented companies.

Sacca, who is now 46 years old, is actually creating four funds — two oriented around past investments and two for future investments. The two early-stage funds 411.2 LP and 419.1 LP are named after the “the highest monthly average concentration of CO2 in the atmosphere” in the years that the team started investing out of the funds.”

2. “In other words, the war in Afghanistan is like seeing management consultants come to your badly managed software company where everyone knows the problem is the boss’s indecisiveness and cowardice, except it’s violent and people die.

Today, this short-termism has taken over everything, including the military, which is now dominated by McKinsey-ified glory hounds without wisdom and defense contractors with market power. And this leadership class hasn’t just eroded our strategic capacity, but the very ability to conduct operations.

More fundamentally, the people who are in charge of the governing institutions in our society are simply divorced from the underlying logistics of what makes them work. Everything, from the Boeing 737 Max to the opioid epidemic to the waste inside most big corporations to war, has been McKinsey-ified. And it’s all covered up with moral outrage, partisanship and culture warring, public relations, and management wisdom bullshit.”

3. “In the 21st Century, the basic financial entity is the individual. Individuals are exposed to the whims of the market directly, incentivizing them to suppress their own personality and emotions in order to “be themselves” in a way that is likely to generate the highest financial return.

This means creators and entrepreneurs are freer than ever. But it also means they are trapped in an invisible financial machine that encourages them to completely forget who they are, to become the person that the market needs them to be. The most obvious examples of this are platforms like OnlyFans and Instagram, where people make money being “authentic” — but where being authentic means constantly responding to feedback from thousands of customers and market signals.”

4. “Yet the metaverse, a technologist’s dream, is Facebook’s nightmare. It would essentially render the social network irrelevant. Facebook’s most valuable asset is its social graph, its dataset of users, links between users, and their shared content. In a metaverse future, we’ll all have identities on the metaverse, and anyone can open a virtual space for sharing photos of your 10-year-old’s birthday party or arguing over vaccines.

There will be trillions of dollars in value created by the creators of these spaces, and the infrastructure to support them, but an open world of interoperable identities and information is antithetical to Facebook’s project, which is to keep you on Facebook.”

5. “We admire those who made a change and came out on top, and we feel compassion for those who got stuck.

However, sooner or later the feeling of compassion and understanding disappears.

After a period of mourning for our past lives, we expect even those who are staying behind to start adapting and “getting over it”.The longer they stay stuck, the less compassion and understanding we have for them.

The same expectations we are starting to hold organizations and companies to. Those who refuse to adapt, who stagnate and who don’t figure out will be left behind.”

6. “Markets Eating The World 2.0 will begin when, instead of revolutionizing existing industries, markets create entirely new ones.

Good examples of this include Prediction Markets (markets for ideas), ISAs (markets for people), Charter Cities (markets for governance), and NFTs (markets for internet culture).

Crypto, in theory, should usher in a new era for markets for the following three reasons:

It removes rent-seeking middle men from taking profits.

It allows markets to operate without being monitored or controlled by those same rent-seeking middle men.

It allows for the creation of totally autonomous systems. A machine can now participate in a market without needing a human to intervene.”

7. The title says it all. Very good. “How Not to Die in the Wild”

8. Very interesting.

“In the 60 years since that handshake, James Bond has become one of the most enduring franchises in Hollywood. The films have grossed ~$7B at the global box office (~$18B accounting for inflation).

Through all 25 movies, the Broccoli family has maintained creative control of the franchise, weathering lawsuits, a rotating cast of studio executives, and the threat of bankruptcy.”

9. This is why Federer is THE Billion dollar tycoon-sportsman.

Federer had the means at this stage in his career to reduce a great deal of friction. He was on his way to becoming one of the few athletes in history to earn $1 billion during his playing career….

Federer’s two decades of on-court achievements only begin to account for that stunning total: About $130 million of Federer’s earnings has come from official prize money, a figure that puts him second on the all-time list in tennis to Djokovic’s $152 million. The rest has come through sponsorships, endorsements, appearance fees at tournaments and lucrative exhibition events around the world. Federer’s performance in this domain has been every bit as impressive as his performance on court — perhaps even more so when you consider the disadvantage he started with.

The French have a fine expression that applies to Federer: “joindre l’utile à l’agréable,” which translates loosely as “combining business with pleasure” but is actually broader in scope, encompassing the tasks of daily life. If you wonder how Federer managed to remain in the top 10 until age 40, part of the answer lies in his ability to embrace what some other prominent athletes might consider drudgery. That applies to long-haul travel, news conferences in three languages and mundane one-on-one interactions with various corporate partners.”

10. “Although Koch isn’t big on consuming it himself, he’s going public now with a long-held belief: Cannabis should be legal nationwide. So he’s putting his name, and nearly $25 million of his $45 billion fortune, to influence criminal-justice reform and legalization by the end of 2021. Brian Hooks, Koch’s right-hand man, says that a good barometer to gauge what Koch and his network are eventually willing to spend is what they’ve already put toward these issues — some $70 million in total over the last two years.

“It should be the individual’s choice,” says Koch from his office in Koch Industries’ sprawling granite compound in Wichita, Kansas. “[Prohibition] is counterproductive. It ruins people’s lives, creates conflict in society and is anti-progress. The whole thing never made sense to me.”

11. Quiet giant.

“Dell Technologies, at $75 billion, is worth more than four times what it was before it went private. Because of all that leverage, Dell, Durban’s Silver Lake and co-investors have done far better, with total gains of more than $40 billion, according to Forbes’ calculations. Dell’s personal net worth has risen to $50 billion. In many ways, he was the architect of the biggest buyout coup of all time.

“It didn’t feel that risky to me,” he says. Skeptics had missed the big picture. Dell gushed cash and sat on plenty of valuable software assets to sell. And cheap money provided the ideal conditions to finance a corporate gut renovation.

“Michael is financially sophisticated. He’s not a technology geek by any stretch of the imagination,” says George Roberts, the billionaire cofounder of private equity giant KKR and a pioneer of the leveraged buyout, who marvels at the deal. “He bought the company back at the right time. With hindsight, his timing looks pretty perfect to me.”

12. “Like I said, people want to be a part of something. And people want to make money — people want the satisfaction of money in their pocket (or rather, ETH in their wallet) as well as the satisfaction in knowing that they bet on the right horse. That their taste and intuition and vision were vindicated by time and by the market. ‘I told you so’ is a powerful driver, as is FOMO, as is mimetic desire.

Audiences have never been able to tap into this like they can now. This is a Web 3.0 development. This is the engine of the Soaring Twenties.

Rather than feeling hipster disappointment when an artist who you follows since their first underground release blows up, you will feel joy. Because you are a stakeholder in the productions of that creator’s artistry. The value — both culturally and financially — has been captured and distributed between the artist themselves and their friends, fans and co-conspirators. Everyone grows together.”

13. This!

“We now live in a world in which, by typing things into your phone or your keyboard, or saying things into a microphone, or snapping pictures or videos, you can marshall resources, support, and opportunities. Crypto has the potential to take it up a notch by baking game mechanics — points, rewards, skins, teams, and more — right into the whole internet.

The Great Online Game is free to play, and it starts simply: by realizing that you’re playing a game. Every tweet is a free lottery ticket. That’s a big unlock.

Anyone can play. You can choose how to play given your resources and skills at the current moment. You can level up fast. Financial and social capital are no longer tied so tightly to where you went, who you know, or what your boss thinks of you. This game has different physics and wormholes through which to jump. It’s exponential instead of linear.”

14. Wow, Owen Wilson is 51. This is a good profile.

“Sometimes it seems like life is being played by Gene Hackman in Hoosiers. Tough but fair. He’s going to demand a lot, but if you play as a team and do your job, things work out. That’s a good feeling. Things make sense.

But of course sometimes life seems to be played by Tom Hardy in The Revenant, some nightmarish guy trying to kill you, where even if you get the upper hand, he’s still going to be there at the end whispering, ‘This ain’t gonna bring your boy back’ or your dad back or any good times from your past back. Or whatever. And when life’s being played by that guy, you just gotta hang on and wait for it to pass.”

15. “The game has changed. We are watching a different type of asset get created and adopted right before our eyes. Whether you are talking about bitcoin or any of the other assets, legacy investors are going to be forced to update the mental models that they have used in the past. The timeless investing principles of “buy low, sell high,” “dollar cost average into great assets and hold them for a long time,” or “buy an asset with a margin of safety” still apply, but the methods to determining value are going to evolve.

Just as legacy investors misunderstood Amazon and Facebook for nearly a decade each, we are watching the legacy investors struggle to understand these new assets. That is nothing new actually. This is a story as old as time. It is important to identify the trend underway and realize that the investors who have an open mind will be the capital allocators who likely succeed in this environment.”

16. Impressive volunteer acts by heroic people. But also shows the breakdown of government capability. Covid and Afghanistan shows the declining competence of the US government and most governments around the world sadly.

17. Stuff like this makes me think people are nuts. Folks are angry for whatever reason and looking for excuses to act out.

18. This is timely and worth a read.

“In short, start pricing your net worth in asset terms. Even if you don’t believe in our world view of the sovereign individual, at least peg your net worth to an asset. It could be as simple as the S&P 500 where you decide if you “earned more money” relative to S&P 500 return or if you “gains more S&P net worth” (ie. you outperformed the S&P 500).

This type of thinking will prevent maximum regret. You will focus more on “what am i going to do with this money if i sell”… Then you will realize there is nothing else to buy.”

19. I really appreciate these thoughts.

“I don’t think we can avoid volatility in the future and this has happened before. The 15th century was not pleasant for a lot of people as trade was decentralized, just payments are catching up in a modern centralized world now.

The Decentralized Future colliding with the Age of the Disinterested Hegemon doesn’t sound very tranquil.

So for me, the importance of building an investment practice grounded on ample liquidity and productive assets is the key for me to navigate whatever the world decides to give me, whether tranquil or volatile.

Dollars, gold, and bitcoin, it is all just liquidity which I can use to invest in productive assets run by other prudent men who are honorable and I can trust, because working in decentralized societies taught me personal honor becomes more important, not less, so that is where my focus will be going forward.”

20. Augur of the future of VC. Elad Gil, Oren Zeev, Lachey Groom and Josh Buckley are pioneering the path of the Solo Capitalist.

“Solo VCs investing at the growth stage, and in particular leading rounds, is what makes this a unique wave,” said Nikhil Basu Trivedi, co-founder of early-stage investing firm Footwork. The challenge for these individuals, he said, is continuing to spend time with portfolio companies as they do more deals. Gil, he said, “seems to be able to do it all.”

The larger funds raised by Gil may augur a more frenzied investing pace for solo venture capitalists, who could seek to follow him by leading late-stage funding rounds. Other solo investors, such as former Stripe product leader Lachy Groom and Product Hunt CEO Josh Buckley, typically lead seed and early-stage rounds — small investments that require less capital. Although they have also raised larger funds in the last year — Groom raised $250 million for his third venture fund — none is close in size to Gil’s.”

21. I understand the sentiment. (ironically as I am preparing to jump back into the fray after a long break)

“Valuations have become out of control. VCs began investing in every single sector. It makes sense because technology, health, how we eat, next-generation consumers, etc., have changed everything. Yet to value a company that sells mattresses like a software company makes zero sense to me. The amount of money just tossed around and lost without care is mind-boggling. There are products that I purchased knowing full well that some VC paid for them. Actually, some LP paid for it. I didn’t get it.

At the end of the day, nobody has to look any farther than the publicly traded companies to understand correct valuations. Correct valuations allow everyone to grow and hopefully prosper. It stopped happening. Companies being valued at $30M getting out of YCombinator are not for angel investors. The expectation with these valuations also creates an environment of crash and burn that is not pretty. No wonder mental health issues are on the rise.”

22. “Put differently: Abundant things become economically worthless, even if they’re foundational for life. Scarce things make people rich, even if they’re meaningless. These ideas incentivize people to artificially manufacture scarcity and avoid abundance everywhere, and this perverse incentive model results in what we call “multipolar traps” — scenarios where the things that work well for individuals locally are directly against global well-being.”

23. Good discussion on why 2nd (or even 3rd Passports) really make sense in our new world. Diversify your citizenship!